1. Non-Energy Benefits Estimating the Economic Benefits of the Ohio Electric Partnership Program 2006 ACI Home Performance Conference May 25, 2006 Jackie Berger

2. 2 Ohio Electric Partnership Program Electric usage reduction program managed by Ohio Office of Energy Efficiency High use electric PIPP customers are targeted for service delivery Measures include refrigerators, freezers, light bulbs, aerators, showerheads, water heater wraps

3. 3 Macroeconomic Effects Direct Effects Indirect Effects Induced Effects Jobs and output created from the initial investment in the program. + Jobs and output in industries that supply goods and services to the program. + Jobs and the output created when the individuals who are directly and indirectly affected by the program spend their earnings. Examples: auditor salaries, refrigerator purchases. Examples: office supplies purchased by service delivery agencies. Examples: consumer goods purchased by service delivery staff members.

4. 4 Economic Multiplier Example: –Program expenditures (direct effects): $10 million –Indirect effects: $500,000 –Induced effects: $1 million –Multiplier = 1.15

5. 5 Ohio Economic Benefits 1.Expenditure of State funds on program substitutes for expenditure of State funds on energy assistance. 2.Ratepayers have reduced electric costs if program benefit/cost ratio is > 1.

6. 6 Expenditure of State Funds If Ohio was not spending State funds on the EPP, these funds would be used to subsidize electric bills. Expenditures on energy conservation have a greater impact on the economy than expenditures on electricity. –A larger fraction of expenditures on energy conservation are spent inside the state. –Energy conservation work is more labor intensive than electricity production.

7. 7 Expenditure of State Funds Economic benefit from EPP expenditures = conservation multiplier – electric multiplier () * EPP expenditures in Ohio – electric multiplier * EPP expenditures outside Ohio

8. 8 Reduction of Ratepayer Subsidy If the program has a benefit/cost ratio of > 1, there will be an additional reduction in the amount spent on electricity. This reduction goes to the Ohio ratepayers who had subsidized the electric use of PIPP participants. Ohio ratepayers have more disposable income to spend on consumer goods that have higher multipliers for the Ohio economy than electricity multipliers.

9. 9 Reduction of Ratepayer Subsidy Economic benefit from EPP net benefits = consumer goods multiplier – electric multiplier () * net benefits spent – electric multiplier * net benefits saved

10. 10 Summary of Economic Benefits Source of Impact Positive Economic Benefits Negative Economic Benefits Multiplier BaseMultiplierBase Without EPP With EPP EPP Expenditures Electricity Construction, consumer goods, government, technology services EPP expenditures in Ohio Electricity EPP expenditures outside of Ohio. EPP Net Benefits Electricity Consumer goods Part of the net present value of benefits that is spent. Electricity Part of the net present value of benefits that is saved.

11. 11 EPP Expenditures FY 02 – FY 03% Spent in OhioOhio Expenditures Software$254,0000%$0 Programming$958,760100%$958,760 Computers$781,68615%$117,253 OEE Staff$331,098100%$331,098 Evaluation$272,55510%$27,255 Consultants$177,71910%$17,772 Other$157,96590%$142,169 Training$271,85290%$244,667 Measures$4,886,82490%$4,398,142 Admin$2,012,381100%$2,012,381 Total$10,104,840$8,249,497

12. 12 Multipliers Output Multiplier Employment Multiplier Dollars of output per $1 spent Jobs created per $1 million spent Electricity 1.436.9 Construction 1.8518.2 Consumer Goods 1.7442.2 Government 1.8527.9 Technology 1.71N/A Services 1.9427.7

13. 13 Impact on Output from EPP Expenditures $ Spent in Ohio Multiplier Output Increase ElectricEPP Software$01.43--$0 Programming$958,7601.431.94$488,967 Computers$117,2531.431.71$32,831 OEE Staff$331,0981.431.85$139,061 Evaluation$27,2551.431.74$8,449 Consultants$17,7721.431.74$5,509 Other$142,1691.431.74$44,072 Training$244,6671.431.94$124,780 Measures$4,398,1421.431.74$1,363,424 Admin$2,012,3811.431.94$1,026,314 Total$8,249,497$3,233,407

14. 14 Impact on Output from EPP Expenditures Electric Multiplier $ Spent Outside OhioOutput Decrease Software1.43$254,000-$363,220 Programming1.43$0 Computers1.43$664,433-$950,139 OEE Staff1.43$0 Evaluation1.43$245,300-$350,779 Consultants1.43$159,947-$228,724 Other1.43$15,796-$22,588 Training1.43$27,185-$38,875 Measures1.43$488,682-$698,815 Admin1.43$0 Total$1,855,343-$2,653,140

15. 15 Impact on Output from EPP Expenditures Output IncreaseOutput DecreaseNet Output Change Software$0-$363,220 Programming$488,967$0$488,967 Computers$32,831-$950,139-$917,308 OEE Staff$139,061$0$139,061 Evaluation$8,449-$350,779-$342,330 Consultants$5,509-$228,724-$223,215 Other$44,072-$22,588$21,484 Training$124,780-$38,875$85,905 Measures$1,363,424-$698,815$664,609 Admin$1,026,314$0$1,026,314 Total$3,233,407-$2,653,140$580,267

16. 16 Net Energy Savings Net Lifetime Benefit (Per Home) Number of Homes Total Benefit High Use$4535,561$2,519,133 Moderate Use$661519$343,059 Total6,080$2,862,192

17. 17 Impact on Output from EPP Net Benefit Amount Spent Multiplier Output Increase Amount Saved Output Decrease Net Output Change ElectricEPP High Use $2,267,2201.431.74$702,839$251,913-$360,236$342,602 Mod Use $308,7531.431.74$95,713$34,306-$49,058$46,655 Total$2,575,973$798,552$286,219-$409,293$389,259

18. 18 Impact on Employment from EPP Expenditures $ Spent in Ohio Multiplier Employment Increase ElectricEPP Software$06.9--0 Programming$958,7606.927.719.9 Computers$117,2536.942.24.1 OEE Staff$331,0986.927.97.0 Evaluation$27,2556.942.21.0 Consultants$17,7726.942.20.6 Other$142,1696.942.25.0 Training$244,6676.927.75.1 Measures$4,398,1426.942.2155.3 Admin$2,012,3816.927.741.9 Total$8,249,497239.8

19. 19 Impact on Employment from EPP Expenditures Electric Multiplier $ Spent Outside Ohio Employment Decrease Software6.9$254,000-1.8 Programming6.9$00 Computers6.9$664,433-4.0 OEE Staff6.9$00 Evaluation6.9$245,300-1.7 Consultants6.9$159,947-1.1 Other6.9$15,796-0.1 Training6.9$27,185-0.2 Measures6.9$488,682-3.4 Admin6.9$00 Total$1,855,343-12.8

20. 20 Impact on Employment from EPP Expenditures Employment Increase Employment Decrease Net Employment Change Software0-1.8 Programming19.90 Computers4.1-4.0-0.4 OEE Staff7.00 Evaluation1.0-1.7-0.7 Consultants0.6-1.1-0.5 Other5.0-0.14.9 Training5.1-0.24.9 Measures155.3-3.4151.9 Admin41.90 Total239.8-12.8227.0

21. 21 Impact on Employment from EPP Net Benefit Amount Spent Multiplier Employ Increase Amount Saved Employ Decrease Net Employ Change ElectricEPP High Use $2,267,2206.942.280.0$251,913-1.778.3 Mod Use $308,7536.942.210.9$34,306-.210.7 Total$2,575,97390.9$286,219-1.989.0

22. 22 Summary Source of Impact Output Increase Employment Increase EPP Expenditures$580,267227 EPP Net Benefits$389,25989 TOTAL$969,526316

23. 23 Contact Information Jackie Berger jackie-berger@appriseinc.org Director of Program Evaluation APPRISE Incorporated 403 Wall Street Princeton, NJ 08540 609-252-8009 www.appriseinc.org