Minnesota Gas Energy Efficiency...

Minnesota Gas Energy Efficiency PotentialEfficiency Potential

Revised Final Report

April 3, 2009

Minnesota Gas Energy Efficiency PotentialProprietary, ©2009 Navigant Consulting, Inc.

Navigant Consulting, Inc.1717 Arch Street, Suite 4800 Philadelphia, Pa. 19103215‐832‐4466www.navigantconsulting.comNCI Reference: 135892

Notice and Disclaimer

Notice:CenterPoint Energy, Integrys, and Xcel Energy sponsored this study to evaluate the market for natural gas energy efficiency in Minnesota. To meet that objective, this report g gy y j pwas prepared by Navigant Consulting, Inc. (NCI) for these companies. This report represents NCI’s best judgment in light of information made available to us. The reader is advised that in certain cases, NCI has not independently verified the accuracy of data and estimates contained herein. The reader understands that no assurances can be made as to the accuracy of the results.

This report must be read in its entirety. This report does not constitute a legal opinion.

No person has been authorized by NCI to provide any information or make any representations not contained in this report. Any use the reader makes of this report, or any reliance upon or decisions made based upon this report are the responsibility of the y p p p p yreader. NCI does not accept any responsibility for damages, if any, suffered by the reader based upon this report.

March 13, 2009

Minnesota Gas Energy Efficiency PotentialProprietary, ©2009 Navigant Consulting, Inc. 1

Acknowledgements

This study of DSM Potential in Minnesota was conducted by Navigant Consulting, Inc. under contract to CenterPoint Energy, Integrys, and Xcel Energy. The utilities working committee on energy efficiency provided extensive data, insights, assistance and guidance. The members included:

Steven Gunn, Program Manager – Energy Conservation, Integrys Angela Kline, Energy Programs Manager, CenterPoint EnergyBridget McLaughlin Senior Regulatory Analyst Xcel EnergyBridget McLaughlin, Senior Regulatory Analyst, Xcel EnergyMeike Hengelfelt, Energy Marketing Manager, CenterPoint EnergyJason Pung, Technical Sales Manager, CenterPoint EnergyRajan Thomas, Technical Consultant, Xcel Energy

Addi i l i b i l d T dd B J H H hAdditional committee members include: Todd Berreman, Jean Hammer, Heather Hemphill, Nick Mark, Jan Nelson, Jeremy Peterson, Sarah Schaffer, and Shawn White

Principal authors Craig McDonald, Edward Barbour, Jay Luboff, Amul Sathe and Nik Schruder. Additional support was provided by Joanna Gubman, Rebecca Honeyfield, Lem Kusik, A i io a suppo as p o i e by Joa a Gub a , ebecca o ey ie , e usi ,Adrienne Gvozdich and Erin Palermo.

Special thanks are due to the staff of American Council for an Energy Efficient Economy (ACEEE) including Neal Elliott, Associate Director for Research.


Contents

2

1

Project Scope and Approach

Introduction

3 Sales Profiles and Forecasts

j p pp

Energy Efficiency Technologies4

Technical and Economic Potentials5

Program Design6

Achievable Potentials and Costs7 Achievable Potentials and Costs7

Recommendations8


AppendicesA

Detailed Table of Contents

Section Page1. Introduction and Summary 62. Project Scope and Approach 10

Scope 11

Section Page7. Achievable Potentials and Costs 97

Technologies Analyzed 98Methodology 99Scope

Approach 12Caveats and Limitations 13

3. Sales Profiles and Forecasts 15Overview 16Methodology 17

Methodology 99Scenario Definitions 104Example Calculation 107Results 109

8. Recommendations 125O i 126Methodology 17

Gas Price 524. Energy Efficiency Technologies 57

Screening Process 58Measure Data 61

5 Technical and Economic Potentials 62

Overview 126Rate Design 127Policy 129

Appendices 138References 139

5. Technical and Economic Potentials 62Methodology 63Results 72

6. Program Design 75Introduction 76St k h ld C t 77

A. Utility Sales Forecasts 141B. Natural Gas Price Forecast 143C. Technology Screening 156D. Measure Database 163E Economic and Technical 169Stakeholder Comments 77

Recommendations 80Enhanced Program Costs 88Additional Enhancements 91

E. Economic and Technical 169F. Payback Acceptance 170G. Industrial General Measures 171H. Scenario Program Cost Tables 174I. Program Design Best Practices 177


Table of Abbreviations and Acronyms

AbbreviationsACEEE – American Council for an Energy Efficient Economy HPwES – Home Performance with Energy Star

AFUE ‐ Annual Fuel Utilization Efficiency IOU – Investor‐Owned Utility

BAU – Business as Usual IR – Infrared

CBECS – Commercial Building Energy Consumption Survey KBtu – Thousand British Thermal Units

CEE – Consortium for Energy Efficiency MEF – Modified Energy Factor

DSM D d Sid M t MF M lti F ilDSM – Demand Side Management MF – Multi Family

Dth/Dtherms – DekaTherms (10 Therms) MMBtu – Million British Thermal Units

EF – Energy Factor Mth/Mtherms – MegaTherms (1 Million Therms)

EI – Energy Intensity NCI – Navigant Consulting Inc.

EIA – Energy Information Administration NYSERDA – New York State Energy Research and Development Authority

EMS – Energy Management System RECS – Residential Energy Consumption Survey

EUI – Energy Use Index SF – Single Family

GHG – Greenhouse Gas SIC – Standard Industrial Classification

GPCM – Gas Pipeline Competition Model TRC – Total Resource Cost

gpm – gallons per minute


HH – Household

Contents

2

1


Introduction


j p pp



Program Design6


Recommendations8


AppendicesA

Introduction: Existing Programs

The Minnesota gas utilities have a 20‐year history of successful gas energy efficiency programs covering a spectrum of end‐uses and sectors.

Minnesota Gas Utility Current Energy Efficiency

Programs

Residential IndustrialCommercial

• Space heating• Water heating• Low flow showerheads• Energy audits

• Applicable commercial measures

• Energy management plan design assistance

• Space & water heating• CO Sensors• Food service equipment• Low flow showerheadsEnergy audits

• Low income weatherization

• Affordable housing• New homes

• Grain dryer• Heat treating• Tunnel ovens• Thermal oxidizersC

Low flow showerheads and faucet aerators

• Technical seminars• Efficiency controls• Retrocommissioning,

di & b h ki


• Custom measuresaudits, & benchmarking• Design assistance

Hi h d l til i h (GHG) i i d ti

Introduction: Drivers

High and volatile gas prices, greenhouse gas (GHG) emission reduction objectives, and state policies are driving the utilities to re‐evaluate existing programs and develop more aggressive energy efficiency programs.

Reduce per capita energyReduce per capita energy usage by 15% by 2015

Increased

Economic and

emphasis on efficiency due to volatile energy prices and GHG Economic and

Policy Drivers of Energy Efficiency

prices and GHG concerns

Reduce GHG emissions to 15%, 30%, , ,and 80% below 2005 levels by 2015, 2025, and 2050 respectively


Goal of annual retail natural gas savings of 1.5%/yr

Introduction: Scope of Work

Navigant Consulting, Inc. (NCI) worked with the three Minnesota gas utilities to develop estimates of the potential for gas energy efficiency including detailed analysis of existing gas use, available energy ffi i ti d li i defficiency options, and policies and programs.

Determine Economic Potential

Develop ProgramScenariosPotential Scenarios

• Develop baselineo Sales profile

• Review current programs• Identify key market allieso Sales profile

o Sales forecasto Gas prices

• Characterize technologies

• Develop program bundles• Recommend enhancements• Determine complementary policiesg

• Screen technologies• Determine technical and economic potential

policies• Identify implementation requirements

• Develop program scenario


summaries

Contents

2

1


Introduction


j p pp



Program Design6


Recommendations8


AppendicesA

Scope and Approach: Scope

Estimates of the potential for gas energy efficiency through 2019 were developed, potentials were estimated for multiple scenarios:• Technical – Assumes 100% of all applicable measures are

C t l R l ti hiinstalled where they are deemed to be technically feasible• Economic – Assumes all measures that are technically

feasible and cost‐effective using long‐run gas price forecastsand avoided gas costs are installed by all customers Technical

Conceptual Relationship Among Potential Definitions

• Achievable – Savings that could realistically be achieved through specific programs and policies assuming marketbarriers are successfully addressed. Several scenarios were analyzed:

Economic

Achievable

— Current programs— Current incentive levels with added measures and enhanced program design and marketing— Enhanced program design with increased incentive levels — Enhanced programs with incentives equal to 100% of measure incremental cost

A l d f b h l d l— A limited set of behavioral and unconventional measures

• Measures considered included 74 technologies that were judged to have the highest likelihood of providing cost‐effective gas savings in Minnesota— Measures were selected for their applicability to gas customers in Minnesota


— Fuel switching measures were not considered— Exempt gas loads and utility power plant gas usage were not included

Scope and Approach: Approach

Program potentials are calculated based upon detailed analysis of gas use in Minnesota and the measures for cost effectively improving efficiency at the customer segment and end‐use level.

Recommend‐ations

(Section 8)

Id f

ProgramPotentials(Section 7)

Program Design

(Section 6)

Technical & Economic Potentials (Section 5)

EE Technology (Section 3)

Sales Profiles & Forecasts(Section 3)

•Develop detailed estimates of gas use by customer segment and end‐use

•Reconcile with

• Identify energy efficiency technologies that will provide significant cost‐effective gas

Forecast the potential for energy efficiency if all customers adopted all applicable

• Interview stakeholders about strategies for improving current programs

•Review best

Forecast energy efficiency savings and costs for:•Current programs

•E h d

Provide recommendations on policy issues to complement utility program efforts

Reconcile with utility sales forecasts

•Develop gas price forecasts (low, medium, high)

energy savings in Minnesota

•Develop detailed data on current penetration, costs, energy

ppmeasures:•All measures (technical)•Adopted only cost‐effective

Review best practices in other efficiency programs

•Develop recommended

•Enhanced programs and new measures (Scenario 1)

• Increased incentives costs, energy

savings and lifetimes for these technologies

measures (economic), using high, medium, and low avoided costs

program enhancements

•Estimated additional program costs for the enhancements

(Scenario 2)• Incentives to 100% of incremental costs (Scenario 3)Addi i l


•Additional behavioral measures

Scope and Approach: Caveats and Limitations

These forecasts of energy efficiency potential are subject to major sources of uncertainty due to market uncertainties.

•Gas price forecasts are highly uncertain. The gas price forecasts in this study were developed in September 2008. By January 2009 gas prices were substantially lower than the original low gas price scenario.

•The general economic downtown has resulted in closure of facilities, reduced loads, and limited the ability of firms to make investments in energy efficiency

Market

and limited the ability of firms to make investments in energy efficiency.•As a result of the economic downturn, the sales forecasts provided by utilities in September 2008 likely overstate sales and opportunities at least for the next few years. CenterPoint’s sales forecast in January 2009 predicts 8% less gas use in 2018 than the previous forecast with no change in program design or incentives.Market

Uncertainties •The US DOE is accelerating the development of new appliance standards including gas furnaces (January, 2009). New standards could significantly reduce the potential savings that may be available for utility programs.

• The Minnesota gas utilities attained significant conservation savings in 2005 through 2007 Survey and market data do not necessarily reflect the higherthrough 2007. Survey and market data do not necessarily reflect the higher penetration of gas energy efficiency measures due to these expanded program results. For example, several major industrial plants implemented large energy conservation projects in 2005 through 2007. The remaining addressable opportunities at these plants, particularly given the sharply lower gas prices and the e o o i do tu ay be i i al


economic downturn, may be minimal.

Scope and Approach: Caveats and Limitations

Additional sources of uncertainty and limitations of this study are due to data limitations and issues in forecasting market penetration for expanded utility programs.

Data Limitations

•Data on the efficiency of gas using equipment and the penetration of energy efficiency measures is very limited. In many cases, national and regional data were used. These data likely understate the current efficiency of gas use in Minnesota given the 20 year history of gas energy efficiency in the state.

Limitations•Measure data used in this report was standardized across all three utilities for consistency. The resulting saving per participant and cost effectiveness of measures may differ from each utilityʹs current assumptions

•The potentials are based on achieving very high market penetrations over the next 10 h hi h i h h ili h hi dPenetration

Forecasting

10 years, much higher penetrations than most other utility programs have achieved. The feasibility and costs of attaining these high penetrations is uncertain and subject to market uncertainties as well customer willingness to participate in programs.

Most of the uncertainties and limitations suggest that the realizable potential may be less than the forecasted potentials presented, particularly given current

economic conditions and past utility conservation program successes.


Contents

2

1


Introduction


j p pp



Program Design6


Recommendations8


AppendicesA

Sales Profiles and Forecasts: Overview

Gas sales and prices were analyzed to develop the base sales, trends, usage and prices that support the potentials analyses.

• Energy sales through 2019 by rate class were provided by the utilities• Current billing data were used to disaggregate the sales into customer segments

• Survey, utility program and secondary data were used to estimate sales by customer segment and end‐use (Sales Profiles)

• These Sales Profiles were reconciled with utility sales and forecasts (i l di th f t d d d id ti l t )(including the forecasted decreased usage per residential customer).

• Gas price forecasts scenarios were developed independently by NCI.• This section includes the following subsections:

—Methodology and statewide sales profile—Sales profiles for CenterPoint, Xcel and Integrys, respectively —Gas price forecasts


Sales Profiles and Forecasts: Methodology

Sales profiles for each sector allow NCI to identify the largest gas end uses and the largest gas consuming customer segments.

Fi h di ib i f l l id i l i l d


• First, the distribution of total gas sales among residential, commercial, and industrial sectors was determined based on utility sales

• NCI used data billing data provided by utilities to segment customers into different sectors— Residential data includes single family, small multifamily (less than 4 units),

and “other” small housing type— Commercial and industrial sectors were separated by their SIC building

codeso e— NCI’s commercial and industrial distinctions differ from the utilities’

statistics that are based on billing classes• Profiles include sales to transport customers and exclude exempt customers


Sales Profiles and Forecasts: Methodology Statewide Gas Use

The residential sector is the largest gas consuming sector in Minnesota, although it still represents less than half of gas consumption.

23%

Gas Consumption by Sector

350,000,000

Gas Sales Forecast

23%

42%

200,000,000

250,000,000

300,000,000

rms

35%100,000,000

150,000,000DTher

ResidentialCommercial Industrial

0

50,000,000

2008 2010 2012 2014 2016 2018

R id ti l C i l I d t i l


Industrial Residential Commercial Industrial

18

Source: NCI calculations Source: NCI calculations

Sales Profiles and Forecasts: Methodology ‐ Residential

The residential sector was segmented into three residence types and used a bottom up approach to determine end uses of gas.


• Bottom up analysis performed for the residential sector• EUIs and appliance saturation for gas appliances were provided by utilities or estimated by NCI

• Gas sales by end use calculated using number of customers, appliance saturation, and EUIs

• NCI assumed a determined decrease in EUIs for space heating and water heating over time to account for baseline efficiency gains based on historical trendsover time to account for baseline efficiency gains based on historical trends

• Any difference between NCI calculations and utility forecasts are made up with miscellaneous gas use

• Distribution of end use consumption is similar across all three utilities


i i u io o e u e o u p io i i i a a o a ee u i i ie


A bottom up analysis calculates gas sold for each end use by building type, the following is an example of gas used for space heating.

T t l N b A l T t lTotal Number of Customers in housing type

Percent of customers with end use

Annual energy use per customer

(EUI)

Total gas consumed by end use in housing type

X X =

Single Family Space Heating

Number of Customers

Percent with End Use EUI (Dth) Gas Use

(Dth)

551 279 98% 71 4 38 574 094X X =

551,279 98% 71.4 38,574,094

Multifamily Family Space Heating

Number of Customers

Percent with End Use EUI (Dth) Gas Use

(Dth)X X =

Total space heating gas use (Dth)

89,397 80% 72.6 5,192,178X X =

Other Housing Space Heating

Number of C

Percent with E d U EUI (Dth) Gas Use

(D h)

49,205,726


Customers End Use EUI (Dth) (Dth)

104,296 89% 58.6 5,439,454X X =


The bottom up analysis is performed for each end use and building type; aggregate gas use is calibrated to utility sector forecasts.

Market Segment Single-Family Multi-Family Other TotalNumber of Households 551,279 89,397 104,296 744,972

Gas Use by Residential Sector

End-Use Market Share of Gas Appliances (%)Space Heating 98% 80% 89%Water Heating 83% 79% 89%Cooking 56% 36% 36%Clothes Drying 60% 7% 34%

Residential Sector (All)

Indoor Natural Gas Fireplaces 29% 2% 33%Miscellaneous 80% 33% 42%Unit Energy Consumption (therms/HH)Space Heating 714 726 586Water Heating 194 164 194Cooking 56 68 57 Space HeatingCooking 56 68 57Clothes Drying 36 24 38Indoor Natural Gas Fireplaces 165 168 135Miscellaneous 15 78 15Gas Sales (DTh)Space Heating 38,574,094 5,192,178 5,439,454 49,205,726

p gWater Heating CookingClothes DryingNG FireplacesMiscellanous

Space Heating 38,574,094 5,192,178 5,439,454 49,205,726Water Heating 8,876,694 1,158,228 1,800,775 11,835,697Cooking 1,728,811 218,844 214,015 2,161,670Clothes Drying 1,190,763 15,019 134,750 1,340,532Indoor Natural Gas Fireplaces 2,637,870 30,037 464,639 3,132,546Miscellaneous 661,535 230,108 65,706 957,349

The bottom up gas use calculation is compared to the utility reported


NCI Bottom Up Calculated Sales (Dth) 53,669,767 6,844,414 8,119,339 68,633,520Utility Reported Residential Sales 68,580,058

residential gas sales and adjusted, if needed

*Data shown in table is for CenterPoint

Sales Profiles and Forecasts: Methodology – Residential: Sales

2% 5% 1%3%

6% 1%2%3%

Total Gas Sales

2008 Gas Use by Building Type

72%

17%

66%

22% Percentage

SingleFamily,81% 72%

17%

1% 2%3%

96,915,544 Dtherms

81%

SmallM lti f il

Other, 10%

12,334,563 Dtherms

4% 1%Total

Multi‐family,9%

18%

4%2% 1%

3%

77%

12,900,472 Dtherms 72%

1,221 MthermsNumber of Residential Customers: 1,328,164

P t f G b E d U

Source: NCI calculations


Percentage of Gas by End Use

Water HeatingCookingSpace HeatingClothes Drying

MiscellaneousIndoor Natural Gas Fireplaces

Sales Profiles and Forecasts: Methodology ‐ Commercial

The commercial sector was segmented into eleven building types and a top down approach was used to determine gas sales by end‐use.


• Commercial sector analysis utilized a top down approach due to the lack of data on customer floor space

•Market was segmented by building types. Gas consumption by building type was totaled from utility billing data

• Appliance saturation and Energy Utilization Indexes* (EUIs) by building type were estimated from CBECS using the Midwest census region

• Space and water heating EUIs were adjusted for differences in heating degree days• Space and water heating EUIs were adjusted for differences in heating degree days• Calculated Energy Intensities** (EIs) reveal the breakdown of gas use in each building type for the commercial sector


*EUI – Therms per “square foot” if a building has the end‐use or appliance**EI – EUI multiplied by the percentage of floor space with the appliance or end‐use

Sales Profiles and Forecasts: Methodology – Commercial: Sales

Schools, offices, large multi‐family and miscellaneous account for approximately 60% of the commercial sector gas sales.

Gas Sales By Building Type Gas Sales By End Use

Office12%

R li i

Misc.14%

10% 0.4%


Health

Religious7%

Lodging3%

Multifamily (over 4 units)18%

21%

Schools15%

7%

Retail7%

Restaurant

69%

Space Heating Water Heating Cooking15% 8%Grocery3%

Warehouse6%

Space Heating Water Heating Cooking

Process Heating Miscellaneous

Si il t th R id ti l t th j it f i d f d t

Source: NCI calculations Source: NCI calculations


Similar to the Residential sector, the majority of gas use is used for space and water heating, although cooking is also a major end‐use

Sales Profiles and Forecasts: Methodology – Industrial

The industrial sector was segmented into sixteen industry types using billing and used a top down approach to determine sales by end‐use.


• Industrial sector analysis utilized a top down approach due to the limited data and the diversity of the segment

• Market was segmented by industry type, gas consumption by industry type was totaled from utility billing data

• Limited data is available on gas use in industry types as gas use is very site‐specific in the industrial sector

• NCI focused on the largest gas consuming industries using MECS* to estimate the• NCI focused on the largest gas consuming industries using MECS to estimate the breakdown of gas by end use in these industries


*Manufacturing Energy Consumption Survey, U.S. Energy Information Administration

Sales Profiles and Forecasts: Methodology – Industrial: State‐wide Sales

The total statewide industrial sector is dominated by Ethanol, Fabricated Metals, Food & Beverage, Paper and Construction.

By Industry Type By End Use

Agriculture4%

Chemical, Petroleum and

Primary Metals3%

Transport

Wood, Wood Products and Furniture

5% 39%

10%

y y yp y

Coal Prod.7%

Paper, Paper Products10%

Services8%

Construction8%

Ethanol17%

Non‐metallic Mineral Products4%

10%51%

Conventional Boilers17%4%

Food, Beverage and Tobacco

13%Fabricated

Metal Products15%

Process Heating

HVAC




Sales Profiles and Forecasts: Methodology – Industrial: State‐wide Sales

MECS data and internal expertise to estimate the end uses of gas in industries; the larger Minnesota industries are shown below.

Ethanol Food and BeverageFabricated Metals

26%

10%

23%

7%

Ethanol Food, and BeverageFabricated Metals

30%37%

64%70%

Paper Construction Transportation33%

40%40%

p

48%

19%

Transportation

40%40%

20%

33%

20%


Process HeatingConventional boilers Miscellaneous

Source: MECS and NCI Estimates

Sales Profiles and Forecasts: CenterPoint ‐ Total

CenterPoint has the largest industrial sector (by volume) of the three utilities; limited growth is expected in each sector.

Gas Consumption by Sector Gas Sales Forecast

22% 160 000 000

180,000,000

22%

45%100,000,000

120,000,000

140,000,000

160,000,000

rms

33% 40,000,000

60,000,000

80,000,000

DTher


0

20,000,000

2008 2010 2012 2014 2016 2018




Source: CenterPoint Forecast and NCI calculations Source: CenterPoint July 2007 Forecast and NCI calculations

Sales Profiles and Forecasts: CenterPoint ‐ Residential

The bottom‐up approach matches CenterPoint’s sales forecast if one assume a 1.57% annual decrease in space and water heating EUIs.1

80,000,000

50,000,000

60,000,000

70,000,000

ms

20,000,000

30,000,000

40,000,000

Dtherm

0

10,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: CenterPoint Forecast and NCI calculations

Bottom‐up CenterPoint Forecast

The annual improvement in EUIs is consistent with the continued replacement of old furnaces and water heaters with more


furnaces and water heaters with more efficient models.

1: Data provided in Appendix A


5% 1%2%3%2% 6% 1%

3% Total Gas Sales


72%

17%22%

66%

Percentage

SingleFamily,

O h 72%

17%

3%1%3%

53,682,507 Dtherms8,079,250 Dtherms

5% 1%

Total

81%

SmallM lti f il

Other,12%

17%

17%

5% 1%2%3%

Multi‐family,7%

76%

6,817,090 Dtherms 72%

68,580,058 DthermsNumber of Residential Customers: 744,972

Percentage of Gas by End UseSource: NCI calculations






Appliance saturation for single family (SF) homes are derived CenterPoint home energy audits and surveys; EUI’s obtained from Xcel data and scaled using RECS to multi‐family (MF) and other.

Market Segment Single-Family Multi-Family Other

End-Use Market Share of Gas Appliances (%)

Space Heating 98% 80% 89%

Water Heating 83% 79% 89%Water Heating 83% 79% 89%

Cooking 56% 36% 36%

Clothes Drying 60% 7% 34%

Natural Gas Fireplace 29% 2% 33%

Miscellaneous 80% 33% 42%Miscellaneous 80% 33% 42%

Unit Energy Consumption (therms/HH)

Space Heating 714 726 586

Water Heating 194 164 194

Cooking 56 68 57Cooking 56 68 57

Clothes Drying 36 24 38

Natural Gas Fireplace 160 163 131

Miscellaneous 15 78 15

Sources: CenterPoint home energy audit surveys, workshop discussions with CenterPoint, 2001 Residential Energy


gy y , p , gyConsumption Survey (EIA), Xcel

Data not available: NCI Estimate

Sales Profiles and Forecasts: CenterPoint ‐ Commercial

CenterPoint’s commercial sector is dominated by large multifamily, miscellaneous accounts, schools and offices.


Office9%Misc.

17%

9% 0.4%


Religious7%

Lodging


22%

Health8%

Lodging3%

Retail7%

Restaurant

69%

Schools14%

Restaurant7%Grocery

2%Warehouse

7%




Source: CenterPoint Customer Data and NCI calculations Source: CenterPoint Customer Data and NCI calculations


The six largest gas consuming building types account for 75% of commercial gas consumption.

Multifamily Office Schools2%

15%5%

27%

6%y

98%80%

67%

Miscellaneous HealthRestaurants

29%

1%2%

Miscellaneous Health

41%

4%Restaurants

9%

12%

2%

68%55%

Space Heating Water Heating Cooking Process Heating Miscellaneous

77%


p g g g g

Source: CBECS


CenterPoint: Commercial EUIs and Appliance Penetrations.Market Segment Office Multifamily Retail Restaurant Grocery Warehouse Schools Health Lodging Religious Misc.

End-Use Market Share (%)

S H ti 91% 90% 98% 88% 96% 91% 88% 90% 77% 100% 85%Space Heating 91% 90% 98% 88% 96% 91% 88% 90% 77% 100% 85%

Water Heating 63% 94% 73% 77% 53% 42% 81% 82% 93% 84% 55%

Cooking 8% 42% 0% 95% 59% 0% 80% 65% 31% 22% 18%

Process Heating 0% 0% 0% 14% 0% 15% 0% 0% 0% 0% 0%

Miscellaneous 1% 0% 0% 0% 16% 0% 22% 9% 18% 0% 8%

EUI (kBtu/SqFt)

Space Heating 52.8 31.3 29.9 18.4 35.0 31.0 29.1 26.1 8.6 31.7 25.8

Water Heating 1.4 12.0 1.2 31.5 30.2 0.5 5.8 37.7 37.6 11.8 17.2

Cooking 1.0 6.0 7.1 161.4 19.4 20.2 3.5 3.7 8.1 3.5 4.0

Process Heating 286.4 0.0 0.0 24.1 0.0 7.6 0.3 32.1 3.5 0.3 73.3

Miscellaneous 1.0 0.0 48.9 1.3 0.0 1.1 0.5 2.2 2.9 0.5 3.5

Intensity (kBtu/SqFt)

Space Heating 48.0 28.1 29.4 16.3 33.6 28.1 25.5 23.6 6.7 31.7 22.1

Water Heating 0.8 11.2 0.8 24.2 16.0 0.2 4.7 30.9 34.9 10.0 9.5

Cooking 0.1 2.5 0.0 153.0 11.4 0.1 2.8 2.4 2.5 0.8 0.7

Process Heating 0.0 0.0 0.0 3.4 0.0 1.2 0.0 0.0 0.0 0.0 0.0

Miscellaneous 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.5 0.0 0.3

Total 49 0 41 9 30 3 196 9 61 1 29 5 33 2 57 1 44 6 42 4 32 5


Total 49.0 41.9 30.3 196.9 61.1 29.5 33.2 57.1 44.6 42.4 32.5

Source: CBECS and CenterPoint comments

Sales Profiles and Forecasts: CenterPoint ‐ Industrial

Excluding electricity generation, CenterPoint’s industrial sector is dominated by ethanol, food and beverage, fabricated metal products, paper, and construction.

Primary Metals5%

Paper, Paper Products6% Chemical

16%

Non‐Exempt Customers Use by End Use

Customer Type23%

Construction6%

Transport Services5%

6%

Non‐metallic Mineral

Other machinery and equipment

3%

Chemical, Petroleum and Coal Prod.

5%

51%

3%

Mineral Products5% 33%

77%

Non‐Exempt

Exempt

Ethanol29%

Food, Beverage and Tobacco

19% Fabricated

Conventional Boilers

Process Heating

HVAC


Metal Products13%

Source: CenterPoint Customer Data and NCI Calculations

Sales Profiles and Forecasts: Xcel – Total

Xcel serves a relatively small industrial sector; the largest growth in sales is expected to occur in the commercial sector.


8%90,000,000

100,000,000

48% 60,000,000

70,000,000

80,000,000

90,000,000

rms

44%

20,000,000

30,000,000

40,000,000

50,000,000

DTher


0

10,000,000

2008 2010 2012 2014 2016 2018



I dust ia Residential Commercial Industrial

Source: Xcel June 2008 Forecast and NCI calculations Source: Xcel Forecast and NCI calculations

Sales Profiles and Forecasts: Xcel – Residential

The bottom‐up approach matches Xcel’s forecasted sales1 if one assumes a 0.47% annual decrease in space and water heating EUIs.

45,000,000

25 000 00030,000,00035,000,00040,000,000

ms

10,000,00015,000,00020,000,000

25,000,000

Dtherm

05,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Xcel Forecast and NCI calculations

Bottom‐up Xcel Forecast






2% 5%3%2% 6%

3%

Total Gas Sales


72%

18%

67%

22% Percentage

SingleFamily,

Oth 72%

18%

1%3%

28,604,075 Dtherms4,255,314 Dtherms

2% 5%Total

80%

SmallMulti‐family,

Other,12%

19%

2% 5%3%

Multi family, 8%

78%

3,498,440 Dtherms 71%

36,268,819 Dtherms


Number of Residential Customers: 395,612Source: NCI calculations






Appliance saturations were obtained from Xcel’s residential energy survey; EUI’s were obtained from Xcel data and scaled using RECS to multi‐Family and other.



Space Heating 98% 80% 89%

W t H ti 92% 79% 89%Water Heating 92% 79% 89%

Cooking 56% 36% 36%

Clothes Drying 60% 7% 34%

Natural Gas Fireplace 29% 2% 33%

Miscellaneous 0% 0% 0%




Cooking 56 68 57





Data not available: NCI EstimateSource: Xcel, 2001 Residential Energy Consumption Survey (EIA).

Sales Profiles and Forecasts: Xcel – Commercial

Xcel’s commercial sector is dominated by large multifamily, schools, offices, restaurants, and miscellaneous accounts.


Office14%

Religious

Misc.11%

11%0.4%


Health5%

Religious8%

Multifamily (over 4 units)

Lodging2%

19%

Schools15%

Retail

20%

70%

Warehouse5%

Grocery3%

Restaurant10%

7%Space Heating Water Heating Cooking



Source: Xcel Customer Data and NCI calculations Source: Xcel Customer Data and NCI calculations



Multifamily Office Schools2%

14%5%

27%

6%y

98%81%

67%

Miscellaneous Restaurants Religious Organizations

28%

2% 1%Miscellaneous Restaurants Religious Organizations

24%

2%9%

12%

2%

69%74%

77%



Source: CBECS


Xcel: Commercial EUIs and Appliance Penetrations.Market Segment Office Multifamily Retail Restaurant Grocery Warehouse Schools Health Lodging Religious Misc.


S 91% 90% 98% 88% 96% 91% 88% 90% 77% 100% 85%Space Heating 91% 90% 98% 88% 96% 91% 88% 90% 77% 100% 85%

Water Heating 63% 94% 73% 77% 53% 42% 81% 82% 93% 84% 55%

Cooking 8% 42% 0% 95% 59% 0% 47% 65% 31% 22% 18%

Process Heating 0% 0% 0% 14% 0% 15% 0% 0% 0% 0% 0%

Miscellaneous 1% 0% 0% 0% 16% 0% 22% 9% 18% 0% 8%Miscellaneous 1% 0% 0% 0% 16% 0% 22% 9% 18% 0% 8%

EUI (kBtu/SqFt)

Space Heating 52.8 31.3 32.1 19.8 35.0 31.0 31.2 26.1 9.3 31.7 27.7

Water Heating 1.4 12.0 1.2 31.5 30.2 0.5 5.8 37.7 37.6 11.8 17.2

Cooking 1.0 6.0 7.1 161.4 19.4 20.2 3.5 3.7 8.1 3.5 4.0

Process Heating 286.4 0.0 0.0 24.1 0.0 7.6 0.3 32.1 3.5 0.3 73.3

Miscellaneous 1.0 0.0 48.9 1.3 0.0 1.1 0.5 2.2 2.9 0.5 3.5


Space Heating 48.0 28.1 31.6 17.5 33.6 28.1 27.4 23.6 7.2 31.7 23.7p g 48.0 28.1 31.6 17.5 33.6 28.1 27.4 23.6 7.2 31.7 23.7

Water Heating 0.8 11.2 0.8 24.2 16.0 0.2 4.7 30.9 34.9 10.0 9.5

Cooking 0.1 2.5 0.0 153.0 11.4 0.1 1.7 2.4 2.5 0.8 0.7

Process Heating 0.0 0.0 0.0 3.4 0.0 1.2 0.0 0.0 0.0 0.0 0.0

Miscellaneous 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.5 0.0 0.3


Total 49.0 41.9 32.4 198.1 61.1 29.5 33.8 57.1 45.1 42.4 34.1Source: CBECS

Sales Profiles and Forecasts: Xcel – Industrial

Xcel’s industrial sector is dominated by construction, transport services, paper products, miscellaneous manufacturing.

Agriculture Chemical,

Wood, Wood Products and Furniture 24%

Non‐Exempt Customers Usage by End Use

Customer Type0.5% g

6%

Clothing and Footwear3%

Petroleum and Coal Prod.

6%Transport Services15%

4%

46%

3%


Construction17% 30%

99.5%

Non‐Exempt

Exempt

Miscellaneous


9%Food, Beverage and Tobacco

Fabricated Metal Products

7%


Process Heating

HVAC


Miscellaneous manufacturing

10%

and Tobacco10%

Source: Xcel Customer Data and NCI Calculations

Sales Profiles and Forecasts: Integrys – Total

The industrial sector dominates Integry’s sales; sales are expected to decline over the next 10 years.


23%60,000,000

49%

40,000,000

50,000,000

rms

49%

28%10 000 000

20,000,000

30,000,000

DTher


0

10,000,000

2008 2010 2012 2014 2016 2018




Source: Integrys 2007 Forecast and NCI calculations Source: Integrys Forecast and NCI calculations

Sales Profiles and Forecasts: Integrys – Residential

The bottom‐up approach matches Integrys’ forecasted sales1 if one assumes a 1.88% annual decrease in space and water heating EUIs.

20,000,000

12,000,00014,000,00016,000,00018,000,000

ms

4,000,0006,000,0008,000,00010,000,000

Dtherm

02,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Integrys Forecast and NCI calculations

Bottom‐up Integrys Forecast






1% 5%3%

Total Gas Sales


“Oth ”

73%

18%o a Gas Sa esPercentage

SingleFamily,82%

“Other” Category

Not Defined

1% 4%

73%

18%

1%3%

14,628,962 Dtherms

Total

82%

SmallMulti‐Family

18%

1% 4%3%

Multi Family,18%

74%

78%

2,584,942 Dtherms

17,219,485 DthermsNumber of Residential Customers: 187,580

P t f G b E d U







Appliance saturation and EUI’s estimates were obtained from Xcel data and RECS.



Space Heating 98% 80% N/A

Water Heating 88% 79% N/A

Cooking 52% 36% N/A

Clothes Drying 37% 7% N/A

Natural Gas Fireplace 29% 2% N/A

Miscellaneous 0% 0% N/A




Cooking 56 68 57





Source: 2001 Residential Energy Consumption Survey (EIA), Xcel



Sales Profiles and Forecasts: Integrys – Commercial

Integrys’ commercial sector is dominated by schools, offices, health facilities and restaurants.


Office17%Religious

Misc.10%

10% 0.3%


Health

6%

Lodging4%


20%

Health11%

Retail8%

Restaurant9%

70%

Schools21%

Grocery3%Warehouse

5%




Source: Integrys Customer Data and NCI calculations Source: Integrys Customer Data and NCI calculations



HealthOfficeSchools

41%

4%2%14%

5%

55%

98%81%

Miscellaneous RetailRestaurants2%

28%

2% 1%Restaurants

9%

12%

2%

98%

69%


77%


p g g g g

Source: CBECS


Market Segment Office Multifamily Retail Restaurant Grocery Warehouse Schools Health Lodging Religious Misc.


S 91% 90% 98% 88% 96% 91% 88% 90% 77% 100% 85%

Integrys: Commercial EUIs and Appliance Penetrations

Space Heating 91% 90% 98% 88% 96% 91% 88% 90% 77% 100% 85%

Water Heating 63% 94% 73% 77% 53% 42% 81% 82% 93% 84% 55%

Cooking 8% 42% 0% 95% 59% 0% 47% 65% 31% 22% 18%

Process Heating 0% 0% 0% 14% 0% 15% 0% 0% 0% 0% 0%

Miscellaneous 1% 0% 0% 0% 16% 0% 22% 9% 18% 0% 8%Miscellaneous 1% 0% 0% 0% 16% 0% 22% 9% 18% 0% 8%

EUI (kBtu/SqFt)

Space Heating 52.8 31.3 32.1 19.8 35.0 31.0 31.2 26.1 9.3 31.7 27.7

Water Heating 1.4 12.0 1.2 31.5 30.2 0.5 5.8 37.7 37.6 11.8 17.2

Cooking 1.0 6.0 7.1 161.4 19.4 20.2 3.5 3.7 8.1 3.5 4.0

Process Heating 286.4 0.0 0.0 24.1 0.0 7.6 0.3 32.1 3.5 0.3 73.3

Miscellaneous 1.0 0.0 48.9 1.3 0.0 1.1 0.5 2.2 2.9 0.5 3.5


Space Heating 48.0 28.1 31.6 17.5 33.6 28.1 27.4 23.6 7.2 31.7 23.7p g 48.0 28.1 31.6 17.5 33.6 28.1 27.4 23.6 7.2 31.7 23.7

Water Heating 0.8 11.2 0.8 24.2 16.0 0.2 4.7 30.9 34.9 10.0 9.5

Cooking 0.1 2.5 0.0 153.0 11.4 0.1 1.7 2.4 2.5 0.8 0.7

Process Heating 0.0 0.0 0.0 3.4 0.0 1.2 0.0 0.0 0.0 0.0 0.0

Miscellaneous 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.5 0.0 0.3


Total 49.0 41.9 32.4 198.1 61.1 29.5 33.8 57.1 45.1 42.4 34.1Source: CBECS

Sales Profiles and Forecasts: Integrys – Industrial

Integrys’ industrial sector is dominated by fabricated metal products, paper, transportation services, wood products and construction.

Chemical, Petroleum and

Wood, Wood

Agriculture6%

23%

Non‐Exempt Customers By End Use

97% of industry’s

Customer Type

Clothing and Footware2%

Petroleum and Coal Prod.

9%

Transport Services

Products and Furniture11%

45%

industry’s use is from

one customer

59%

41%

Eth l

Construction10%


11%

32%Non‐Exempt

ExemptEthanol7%


3%

14%

Miscellaneous

Food, Beverage and

Fabricated Metal d


Process Heating

HVAC


Miscellaneous gTobacco7%

Products14% Ethanol Gas

use taken from data, though seems low

Source: Integrys Customer Data and NCI Calculations

Sales Profiles and Forecasts: Gas Price

NCI Natural Gas Price Forecast is prepared semi‐annually. The September,2008 forecast was used, although subsequent events resulted in significant near‐term price decreases• NCI forecasts natural gas prices based upon its view, insight and detailed

knowledge of the North American natural gas market• NCI models the Northern American natural gas market using GPCM software,

ba ed o bala i of u ly/de a d i all a ket e io hile taki i tobased on balancing of supply/demand in all market regions, while taking into consideration pipelines, rate zones and structures, interconnects, capacities and storage areas

• NCI forecasts forward prices (at over 120 market points), basis, and flows h h h h A d h hthroughout the entire North American grid through 2030

• Additionally, production, storage and multi‐sectoral demand on a monthly basis are modeled

• Models 84 supply areas 208 pipelines 149 storage areas and 440 demand centers• Models 84 supply areas, 208 pipelines, 149 storage areas, and 440 demand centers• NCI has a wide range of clients who use its natural gas forecasts including pipeline

marketers, exploration & production companies, power generators, LNG developers, government agencies, and quasi‐government/non‐profit organizations



• NCI forecasted gas

NCI developed low, medium and high natural gas price forecasts for use in this study.

Forecast Comparison of Annual Henry Hub Gas Price 2008 2019 (N i l $/MMBt )NCI forecasted gas

commodity prices for Henry Hub

• The High and Low Case are derived from a probabilistic 12

13 High CaseMedium CaseLow Case

2008‐2019 (Nominal $/MMBtu)

derived from a probabilistic simulation of the expected deviation from the base case using a historical mean and standard deviation for each

10

11

12

$/MMBtu

standard deviation for each market point

• NCI used the average gas price from each case in the

t ti l l l ti 7

8

9

Nominal $

potentials calculations

6

7

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Source: NCI Calculations


Note – For NCI’s High and Low Case a probability distribution is fit to historical data for all three market points and a Monte Carlo simulation is used to derive a range of possible values around the Base Case.


NCI provided or reviewed inputs to the gas price forecast model.• Oil prices at 113 dollars per barrel in short term declining to 93 dollars per barrel in real terms by

2016 and increasing back to 115 dollars per barrel over the remainder of the forecast period

• Economic growth rate lower in 2008 and 2009 (2.0%), increasing to 3.0% for 2010 through 2014 and decreasing slightly to 2.9% from 2015 for the balance of the forecast period

• Gas demand, by sector – electric generation demand at 1.7% annual growth rate through 2020, decreasing to 1.5% through forecast period

• Timing of new gas supplies – gas production increases at an average rate of 1.0% per year 2008‐2025 before declining slightly at an average rate of 0.2% for the remainder of the forecast— Mackenzie Delta gas starts up 2017 (1.3 Bcf/d);

Alaska gas phased in between 2022 2026 (from 1 0 to 4 0 Bcf/d); and— Alaska gas phased in between 2022 – 2026 (from 1.0 to 4.0 Bcf/d); and— Kinder Morgan Rockies Express (REX) West & East phased in from 2008 – 2020 (ramp from 1.5

Bcf/d to 2.5 Bcf/d).

• Imports of LNG— Upgrades to Cove Point completed by 2008 (additional 0.8 Bcf/d);— Costa Azul (Baja, MX) in service in 2008 (1.0 Bcf/d), with first shipments in April and May— Additional Gulf Coast terminals come online 2008 – 2010 (replace GOM gas), both Freeport LNG

and Sabine Pass received first cargoes in April


and Sabine Pass received first cargoes in April


NCI’s low and high forecast serve as upper and lower bounds for existing forecasts from Xcel and the EIA.

• For additional Forecast Comparison of Annual Henry Hub Gas Price For additional comparison, NCI obtained gas price forecasts from Xcel Energy and the EIA

12

p y2008‐2019 (Nominal $/MMBtu)

gy

• The EIA’s forecast in the 2008 Annual Energy Outlook is slightly higher than NCI’s Low

8

10$/MMBtu

higher than NCI s Low Case and lower than Xcel’s forecast

• See Appendix B for i t bl f 2

4

6

Nominal $

High Case EIALowCase Xcelcomparison table of

annual High and Low Case forecast prices 0

2

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Low Case XcelMedium Case

Source: Xcel, EIA, and NCI Forecast


Note – For NCI’s High and Low Case a probability distribution is fit to historical data for all three market points and a Monte Carlo simulation is used to derive a range of possible values around the Base Case.

Source: Xcel, EIA, and NCI Forecast


Additional cost adder is required to account for environmental externalities, demand costs, and variable O&M costs.

• The 10 year forecast average price for this 10 year resource assessment – the current drop in prices reflects a recession is not the price that should be used for planning.

• In Minnesota a societal test is used to evaluate the cost‐effectiveness of energy efficiency programs to. The societal test includes:— Variable O&M savings ‐ $0 05/mcfVariable O&M savings $0.05/mcf— Demand savings ‐ $1.19/mcf— Avoided environmental damage ‐ $0.31/mcf

• To include the full societal cost of gas in determining economic potentials, NCI adds this g g p$1.55/Dtherm to the average gas prices from its gas price forecasts

Gas price Scenario

NCI Commodity Price (Average $/Dth)*

Total Societal Cost of Gas (Average $/Dth)

Low $7.01 $ 8.56

Med $9.44 $10.99


High $11.87 $13.42

*Commodity costs represent the average over the 10‐year period 2009‐2019 in 2008 dollars

Contents

2

1


Introduction


j p pp



Program Design6


Recommendations8


AppendicesA

Energy Efficiency Technologies: Screening Process

A universe of possible energy efficiency measures were judgmentally screened by the working group each measure to determine those that should be evaluated in detail for this potential assessment for

Cost and Payback

Minnesota.

Efficiency Measures

Technology and Infrastructure Maturity

Market Applicability

Payback Period

pp y

Energy Savings

120+ Possible Energy Efficiency Measures

Measure universe identified from review of other potential studies, gas efficiency


, g yprograms, and state and Federal programs.


Technologies were selected to focus the project resources upon those technologies that would provide significant, cost‐effective savings.

• Technologies were initially ranked by NCI to aid the discussion for the screening workshop (see Appendix C)— Residential and commercial technologies were scored using the ranking matrix— The industrial sector was not scored due the specificity of technologies; they were p y g ; y

ranked by a 3rd party industrial energy efficiency expert• Although NCI recommended some technologies as clear winners and clear

underperformers, all measures were discussedIn some cases technologies were cut from the “winners” category or promoted from— In some cases technologies were cut from the winners category, or promoted from the “underperformers” category

— Utility input revealed other factors not captured by NCI’s screening matrix— Utilities suggested some additional technologies



Based on the list of potential technologies developed at the kick off meeting, NCI began the evaluation and initial screening using a ranking matrix.

Ranking

Parameter Weight

Energy Savings 30% Low/Non‐Existent Medium High

Market Applicability 20% Small/Niche Average Size Large Number of Market Applicability 20% Marketg

MarketgCustomers

Technology and I f t t M t it 20%

Limited Manufacturers/No

S i

Some small manufacturer or a

i l l

Multiple providers and service Infrastructure Maturity Service

Infrastructuresingle large manufacturer infrastructure

Cost and Payback P i d 30% Long payback/high

fi t t

Average payback, may require fi i Short payback


Period 30% first cost financing mechanism

Short payback

Energy Efficiency Technologies: Measure Data

Energy Efficiency Technologies:• Detailed data on savings, costs, current penetrations and measure lifetimes were

developed for each measuredeveloped for each measure• NCI determined: gas savings, incremental installed cost, equipment life, and market

penetration for all technologies• NCI collected data from Minnesota utility program assumptions, previous gas DSM

studies, the Minnesota deemed savings database, the Department of Energy, and NCI internal expertise (Reference are listed in the Appendices section).

• Sources were reviewed by NCI and data was adjusted to reflect energy savings that could be achieved in the Minnesota regiong

• NCI held a workshop to review all technology assumptions with the Minnesota utilities— Feedback adjusted data further based on utility experience specific to the region

A fi l ll th ti bt i d b f i f d— A final consensus on all the assumptions was obtained before moving forward with the potentials calculations

• The data measures characteristics data are included in Appendix D.


Contents

2

1


Introduction


j p pp



Program Design6


Recommendations8


AppendicesA

Technical and Economic Potential: Methodology

Technical potentials were first calculated for each segment, end‐use, and technology assuming 100% adoption in all feasible sites.• Technical potentials calculate the total

e ai i ote tial of a e e y Illustrative Potential Cost Curveremaining potential of an energy efficiency measure if all remaining customers adopted the technology

• Potential takes into account Total Technical Potential

rm Saved

— Current penetration— Interactive effects of technologies— Technical feasibility of remaining

installations

Total Technical Potential

Potential for

Measure 1

Potential for

Measure 2

$/Dekatherinstallations

• Economics and cost‐effectiveness is not considered

• Technical potentials within each sector d d b h l l d f

Cumlative Potential

are ordered by their levelized cost of energy saved and the cumulative potential is determined, constructing a levelized cost of energy saved cost curve


*Levelized cost of energy saved is computed by amortizing the incremental measure cost over the measure lifetime (years) using a 4.75% discount rate. This annualized cost is then divided by the annual energy savings,.


Calculation of technical potentials starts with the total number of customers and uses multiplicative factors to determine the number of potential customers that could adopt the technology.

• Current penetration

Untapped market

Customers making replacement

Percent of customers willing

Customers with targeted end use

• The the number of •NCI applies an 80%• End‐use saturations • Current penetration for each technology is estimated along with maximum possible penetration based on survey data, appliance shipments

• The the number of customers making the decision to equipment in each year is forecasted based upon the equipment lifetime

•NCI applies an 80% technical feasibility factor and willingness

•Special cases:−35% for residential Behavioral measures

• End‐use saturations for all buildings in all sectors are from the sales profiles

• Since each technology targets a different end appliance shipments

data, and other secondary sources

• Difference between the two is the total untapped market

lifetime

• New construction is also

Behavioral measures−60% for industrial energy general measures (see Appendix G)−35% for industrial CHP d bi

guse, only percent of customers with the targeted end use can apply the technology

ppCHP and biomass gasification

Total Number Multiplicative Therms saved Measure h lX X


Total Number of Customers

Multiplicative Factors

Therms saved per customer Technical

PotentialX X =


Example calculation for a high efficiency gas water heater (EF = 0.62) replacing a baseline water heater (EF = 0.59) for a single year

Market Inputs1 Technology Inputs1 Utility Customer InputIncremental

Cost $70

Baseline EUI 192 Th

S i

End Use Saturation 88%

Current Appliance 5%

2019 Number of Gas Customers2

173,738

Percent Savings 13%SaturationMaximum Appliance Saturation

80%

Therms Saved/HH

13.9

Percent Replacing this Year 7.7%*

Willingness Factor 80%

2019 Technical Potential

98,047 Therms

Target % of all customers

4.06%


65

1: Technology assumptions (cost, savings, lifetime) for all screened technologies are provide in Appendix D2: Data for Integrys Single Family Customers* Based on 13 year measure life, 1/13th are replaced each year.


NCI technical potentials include the interactive effects of multiple technologies’ savings applying to the same end uses.

Sort measures according to Determine end use baseline EUI & gincreasing levelized cost savings for lowest‐cost measure

Calculate gas saved using current EUI and percent savingsEUI and percent savings

Calculate gas saved for each measure

Reduce EUI by the measure’s gas savings to calculate new

EUI

Continue to next lowest cost measures; use the new EUI as its baseline


Reducing the EUI as measures are sequentially added allows the model to account for interactive effects of such measures as low‐flow fixtures and efficient water heaters.


Economic potentials were determined from the technical potential cost curve.• Economic potential is defined as the

total te h i al ote tial of all theIllustrative Potential Cost Curve

total technical potential of all the measures at or below a certain gas price

• Economic potential increases as the gas price increases

ved

Technical

• Economic potentials represent the maximum potential that exists for all measures that are cost effective under the different gas price scenarios D

ekatherm Sav

Economic

Gas Priceg p— Low $8.56/Dth saved— Medium $10.99/Dth saved— High $13.42/Dth savedh k h h

Cumlative Potential

$/D

• The key assumption is that the measures are installed in all economic applications – market acceptance is not considered in the economic potential. This is a theoretical maximum

This energy efficiency supply curve depicts the cumulative amount of energy savings available at a different costs ($/Dth saved).


theoretical maximum.


Economic potentials account for varying utilization of furnaces and boilers.• Different groups of customers use the same boiler or furnace different amounts

throughout the year based on building size, insulation, heating needs, and other factors• NCI accounts for this by establishing three EUI bins and splitting customers into these

bins based on data from RECS and CBECS• Potentials were determined for each bin as payback period varies based on usage• Potentials were determined for each bin as payback period varies based on usage• Final potential reported is the sum for all three EUI bins

C i lBoilers

R id i lFurnaces Boilers

Commercial Sector

EUI (therms/sqft)

Percent of population

Com Average Space Heating 0.327 44%

Residential Sector

EUI (therms/HH)


EUI (therms/HH)


Res Average Space Heating 722 90% 722 10% Space Heating

Low EUI 0.304 14%

Medium EUI 0.485 21%

High EUI 1.133 9%

Space Heating

Low EUI 342 21% 278 4%

Medium EUI 682 51% 743 2.7%

High EUI 1256 17% 1466 3 3%


High EUI 1.133 9%High EUI 1256 17% 1466 3.3%

Source: RECS and NCI calculations Source: CBECS and NCI calculations

Technical and Economic Potential: CenterPoint

The cumulative technical potential for CenterPoint is 65,368,153 Dth in 2019.1

$80

$60

$70

aved) 24%

37%

Percent of Potential

$40

$50

ekatherm Sa Residential

Commercial

Industrial

$20

$30

Cost ($/De

39%

High Gas Price

M di G P i


$0

$10

0 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,0002019 C l ti T h i l P t ti l (Dth )

Low Gas Price

Medium Gas Price


2019 Cumulative Technical Potential (Dtherms)1: Potential includes behavioral measures. Total potential excluding these measures is lower and can be found in Appendix E. Detailed data tables are provided as separate spreadsheets

Technical and Economic Potential: Integrys

The cumulative technical potential for Integrys is 18,830,548 Dth in 2019.1

$60 Percent of Potential

$40

$50

aved)

29%40%

Residential

$30

$40

Dekatherm Sa

31%

Commercial

Industrial

$10

$20

Cost ($/D 31%

High Gas Price

Medium Gas Price


$0

0 4,000,000 8,000,000 12,000,000 16,000,000 20,000,000 24,000,0002019 Cumulative Technical Potential (Dtherms)

Low Gas Price


2019 Cumulative Technical Potential (Dtherms)1: Potential includes behavioral measures. Total potential excluding these measures is lower and can be found in Appendix E. Detailed data tables are provided as separate spreadsheets

Technical and Economic Potential: Xcel

The cumulative technical potential for Xcel is 32,680,846 Dth in 2019.1

$90


$60

$70

$80

aved)

42%

8%

Residential


$40

$50

$60

Dekatherm Sa 42%

50%

Residential

Commercial

Industrial

$20

$30

Cost ($/D

High Gas Price


$0

$10

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,0002019 C l ti T h i l P t ti l (Mth )

Low Gas Price

Medium Gas Price


2019 Cumulative Technical Potential (Mtherms)1: Potential includes behavioral measures. Total potential excluding these measures is lower and can be found in Appendix E. Detailed data tables are provided as separate spreadsheets

Technical and Economic Potential: Results

Economic Potential Snapshot: 48,732,583 DTh statewide cumulative potential (2009‐2019) exists at a cost below $8.56/Dekatherm.1

Technical and Economic Potential1

25,000,000

30,000,000

ngs (DTh)

XcelCenterPoint Integrys

15,000,000

20,000,000

, ,

Potential Savin

5,000,000

10,000,000

19 Cumulative

0

Res Com Ind Res Com Ind Res Com Ind

2009‐201

<$8 56/DTh <$10 99/DTh <$13 42/DTh Technical Potential


<$8.56/DTh <$10.99/DTh <$13.42/DTh Technical Potential

1: Data provide in Appendix E with detailed data is separate sheets


Cumulative technical potential is 29‐31% of 2019 gas sales, cumulative economic potential is 14‐24% of 2019 gas sales.

Cumulative Technical and Economic Potentials as a Percentage of 2019 Forecast SalesCumulative Technical and Economic Potentials as a Percentage of 2019 Forecast Sales

33.79%31.37%35%

40%

019 Sales

29.22%

21.71%22.48%

24.72%

18 52%19.80%

21.66%

18.89%20%

25%

30%

tial as a % of 20

18.52%15.98%17.48%

8.89%

10%

15%

20%

Savings Potent

0%

5%

CenterPoint Integrys Xcel

2009‐2019 S


g y

Technical Potential <$13.42/DTh <$10.99/DTh <$8.56/DTh


A carbon tax or cap and trade program will effectively increase gas prices and the economic potential

Statewide Potential Curve

$30

$35• NCI Estimates the potential

range of carbon price will be $20‐50 per ton of CO2

• Effect of a carbon tax will

Statewide Potential Curve

Note: Cost is truncated to allow better resolution of tax increase

$20

$25

therm Sav

ed)• Effect of a carbon tax will

increase levelized gas price by $0.58/Dekatherm for every $10 in tax

• Th b t i th

$10

$15Cost ($/Dekat• The carbon tax raises the

economic cutoff increasing potential

No Tax

$20 Tax $50 Tax

$0

$5

0 40,000,000 80,000,000 120,000,000N I l l l d b d

Increasing Potential


2019 Cumulative Technical Potential (Dtherms)Note: Incremental gas cost calculated based on 120.61 lbs CO2 emitted per MCF and 1.031 DTh/MCF. Source: NCI calculations

Contents

2

1


Introduction


j p pp



Program Design6


Recommendations8


AppendicesA

Program Design: Introduction

Utility program design and governmental policies will be key determinants of the portion of the economic potential that can be developed.developed.

• Minnesota gas utilities have considerable history of promoting energy efficiency with effective programs over the past 20 yearsGi h d i d h d i f ffi i• Given the desire to expand the adoption of energy efficiency measures, program enhancements and new programs, were reviewed:—NCI interviewed trade allies and utility program managers to identify issues and

recommendation for expanding and improving existing programsp g p g g p g—Utility best practices were identified and characterized by thorough interviews

• Recommendations for program enhancements were developed based on these interviews

• Higher higher program delivery and marketing costs were developed for the enhanced programs based on the experience of gas utilities in California


Program Design: Stakeholder Comments ‐ Residential

Program managers and trade allies identified key issues for the residential rebate programs (not all issues apply to all utilities).

Issues* Recommendations

Rebate and Incentive Levels• Prices difference too small between higher and lower tier equipment (furnaces, water heaters, boilers)

• Consider revising incentive philosophy to maximize up sell of highest efficiency equipment.

• Consider temporary increase in incentives du i lo e o o i e iod• Current economic condition preventing

customers to upgrade to higher efficiency• Contractor incentives not consistent

during low economic period• Further analysis on incentives for mid‐market players, appliance distributions, market reps. and dealers

Rebate ProcessRebate Process• Rebate applications remain time consuming

• Confusion with proper documentation

• Consider a joint utility website• Common form and program requirements• Web based platform

Education and Outreach• Customers don’t necessarily link energy savings with efficient water tanks

• Lack of partnerships with industry

• Enhanced education on benefit of energy efficient equipment

• Enhanced outreach to trade associations and


Lack of partnerships with industry association key industry partners

*Issues are not relevant to all utilities, some may pertain to only one or two

Program Design: Stakeholder Comments – Commercial and Industrial

Similarly, key issues pertaining to current C&I programs were identified through feedback from key stakeholders and trade allies.


Rebate and Incentive Levels• Rebate levels are continuously changing (e.g., bonus levels)

• Consistent rebate approaches across utilities• Development of a “one‐stop‐shopping” website to facilitate participation( g )

• Sector remains market driven, especially due to increased energy prices

• No incentive for mid‐level players

website to facilitate participation• Consider revising incentive philosophy (payback, incremental costs, $/therm saved)

• Consider incentives for upstream players, manufactures, dealers, etc.

Rebate Process• Application forms are confusing and onerous

• Consistent rebate approaches across utilities• Stronger focus on prescriptive rebates;

• Custom rebates require extensive resources for both customer and utility

• Discrepancies between utilities in combining rebates for one project

• Concern in ESCO unreported savings

g p padditional research/case studies for custom rebates

• Discussion on how to involve ESCO in rebate process


Concern in ESCO unreported savings


Program Design: Stakeholder Comments – Commercial and Industrial

Continued (not all issues apply to all utilities and programs) …


Programs• Lack of engineering assistance programs• Lack of consistent commissioning and

• Consider “hand holding” programs which include benchmarking, comprehensive audits, design support, etc.

recommissioning program across utilities

• Lack of multi‐residential programs

• Consider consistent commissioning and recommissioning approaches (EMS)

• Development of targeted multi‐residential program based on best practices

Program Delivery• Importance of having dedicated channel representative

• Market segmentation using dedicated account execs with incentives for energy savings

Education and Outreach• Lack of program awareness and knowledge on latest technologies

• Lack of partnerships with industry

• Enhanced education, training and workshops

• Increased liaison and partnerships with key commercial and industrial allies

• Additional resource centers for vendor and


association Additional resource centers for vendor and trade ally training


Program Design: Recommendations ‐ Principles

Key principles for program design were developed from the stakeholder interviews and review of best practices (see Appendix I) for enhanced programs to accelerate program acceptance.

Program Design Principles• Keen focus on targeted market and sub‐market segmentation• Technology bundles and menus matched to sub‐segmentation needs• Centralized program focus that facilitates/coordinates as many program

elements as feasibleSi lif d i i ki f ili— Simplify decision making for utility customer

— “One‐stop shopping”— Coordination of contractor implementation

St li d li ti d i ti— Streamlined applications and incentives processes • Training/certification of qualified contractors• Incentives focused where they can be most effective (e.g., customer plus

t t t l li d l i t f l f t il)


contractor; customer plus appliance dealers; point‐of‐sale for retail)


Key principles for program processes were developed from the stakeholder interviews and review of best practices (see Appendix I) for enhanced programs to accelerate program acceptance.

Program Process Principles• Move towards “hands holding” approach• Benchmarking to best‐in‐class of savings potentials and targets linked with

buildings analysis (audit)• Certification and/or training of qualified contractors, technical assistance

experts and trade alliesexperts and trade allies• Central facilitation/coordination of multi‐contractor bidding and installation• Easy linkages to incentives and financing (where applicable)• Verification of installation



Having similarly bundled programs across all three utilities would reduce stakeholder confusion and increase program awareness.

Benefits of Common

• Reduction in customer and contractor confusion

• Common requirements for training and certification of trade alliesCommon

Programs • Increased opportunities to work with chain accounts (point of sales rebates)

• Ability to collectively target to a specific market segment

Benefits of • Streamlined application and incentives processes• Simplified, single entry point outreach

Bundled Programs

• Increased uptake through “One‐stop‐shopping” process• Cost reduction for utilities in terms of program administration and marketing efforts


Program Design: Recommendations ‐ Residential

Adopt common residential bundled and market segmented programs would ease program participation, improving acceptance and measure uptake.• All three utilities are currently offering a ariety of programs successfully addressing• All three utilities are currently offering a variety of programs successfully addressing

residential customer needs, however programs remain fragmented between utilities.• Recognizing that utilities have already begun to implement their own “bundled” and

market segmented programs, NCI is recommending these programs be enhanced and d d h h ili i i h h l li bexpanded across the three utilities with the goal to ensure commonality between

territories.

Program Xcel CenterPoint IntegrysPoint

Existing/Retrofit

Home Performance with Energy Star (HPwES) + +Residential Heating and Water Heating Rebates“Bundled” Packages (e.g., weatherization bundle, water savings bundle, etc.) + + +water savings bundle, etc.)

New Construction Energy Star for New Construction Program +

Low Income / Affordable Housing

Low Income Weatherization

Non Profit Affordable Housing


Affordable Housing Non‐Profit Affordable Housing


Although gas utilities may find HPwES a challenge to be cost effective, a “modified” HPwES may prove to be more effective.• For gas utilities who do not take into account electricity savings from HPwES, having

ff i HP ES b h lla cost effective HPwES program can be a challenge.• EPA program managers are considering implementing a “modified” HPwES

programs wherein contractors offer “Tiered” approach measures, where the Tier 1 approach would be more cost effective for gas utilities

• In recognition of potential savings, other gas utilities (e.g. Southern California Gas) are offering using their portfolio TRC to “carry” the higher start‐up cost HPwES

Tier 1(Low Cost Measure Only)

Tier 2(Full HPwES Program)(Low Cost Measure Only) (Full HPwES Program)

•Programmable thermostats•Air sealing•Weatherization

All Tier 1 measures, plus:•Attic/wall Insulation•Furnace/boiler upgrades

• US EPA also reports that start up period for HPwES is long, best evaluated over a 5 i d*

•Furnace tune‐ups/filter replacements

pg•Energy Star Windows•Energy Star appliances


year period* * Source: Home Performance with ENERGY STAR: Program Cost effectiveness, US EPA presentation


A gap analysis review of the penetration of current utility rebates in sub‐sector markets identified increased potential in key market areas.• Navigant reviewed previous year’s rebate penetration to identify which sub‐sector

markets took the most/least advantage of each of the utilities rebates• Although high‐use sub sectors are participating in the rebate process, stronger focus on

targeted market and sub‐market segmentation is expected to increase market penetration and promote the adoption of multiple measures when “menu” of measures p p p f p fpresented.

Utility Top Sub‐sector Gas Users

Top Rebated Sub‐Sectors

Most Commonly Rebated Measures

CenterPoint Multifamily, schools, office, health

Multifamily, schools, office, restaurants

Boiler tune ups, boilers, low‐flow showerheads and faucet aerators, cut out controls

X l E Multifamily, schools, Multifamily, schools, B il b il fXcel Energy Multifamily, schools, office, restaurants

Multifamily, schools, office, churches Boiler tune‐ups, boilers, furnaces

Integrys Schools, office, health, restaurants

Churches, schools, offices, restaurant

Programmable thermostats, furnaces, boiler tune ups


Program Design: Recommendations – C&I

Building off of existing utility programs, further develop of market segment specific offerings should be pursued. • Portfolio redesign based on market segmentation • Common growth potential across utilities in following high use sectors:

— Multifamily— Schools

Offi— Offices— Health Care— Food Services

• Potential to leverage existing utility specific programs in other territories• Potential to leverage existing utility specific programs in other territories— Expansion of Centerpoint’s Foodservice Equipment program— Broadening Xcel’s Commercial Real Estate program— Development of Integrys’ Schools for Energy Efficiency program

Successful market penetration will require segment specific account execs with both strong technical and sales capacity – continuous training is essential!


o o g e i a a a e apa i y o i uou ai i g i e e ia

Program Design: Recommendations – C&I

Focus on developing sector specific programs and presented with a “menu” of applicable technologies matching their needs.

Multifamily Sector Fast‐Food RestaurantsMultifamily SectorBoiler EconomizerBoiler reset and cutout controlBoiler stack damper

Fast‐Food RestaurantsHigh Efficiency/IR PackageHE Fryer / IR FryerCharboiler

Boiler tune upsCondensing gas boilers (88% AFUE)Condensing gas furnaces (92% AFUE)Condensing gas water heater (EF = 0.92)

HE Griddle / IR GriddleConveyor OvenAdvanced dishwashing

Drain water heat recoveryFaucet aerator (1.5 gpm)Linkageless system with O2 ControlsLow flow showerhead (1.5 gpm)o o o e ea ( gp )Modulating IR heater (92% AFUE)Power vented unit heatersIncremental roof/ceiling insulationVent dampers


Vent dampersVentilation heat recovery systems

Program Design: Enhanced Program Costs

Implementing the recommended enhancements (bundling, segment specific offerings, common application forms/process, and increased assistances and marketing) will increase program costs.

• NCI reviewed Southern California Gas’ budgets for three broad program types from 2003 through 2008— In 2003, utility programs were aggressive, but relative “plain vanilla”In 2003, utility programs were aggressive, but relative plain vanilla

broadly offered prescriptive and custom rebate programs.— In 2004 ‐2005, the utility started to roll out segment targeted programs

with increased assistance and outreach.— By 2008 the utility offered a broad range of targeted and bundled

programs with strong marketing and technical assistance support. • Between the years 2003 and 2008:

h d d b d d b % ( blTherms saved and non‐incentive budgets increased by 83% (table on next page) Non‐incentive program costs per therm saved increased by $0.07/therm saved (6%)


saved (6%)


The need for a utility to capture more savings required an enhanced focus on marketing, assistance and outreach activities, increasing costs.

Southern California Gas 2003 2006‐2008Southern California Gas Program Costs

2003(Conventional)

2006‐2008(Enhanced Programs)

Difference

Average Program Budget for Non‐Incentives* $1.493 M $2.728 M $1.235 M 83%

Average Program Savings (Therms) 1,290,104 2,361,009 1,070,904 83%

Average $/Therm Saved for $1.12 $1.19 $0.07 +6%

Source: Based on a review of regulatory filings and program reports for three SCG programs: Single Family Residential, Commercial Prescriptive (Express Efficiency) and Multi‐family Retrofit. Includes administration costs, marketing and program delivery costs. Does not include the cost of EM&V or other assessments. Regulatory filings obtained from SCG website (http://www.socalgas.com/regulatory/efficiency/index.shtml) and from the Energy Efficiency Groupware Application (EEGA) website (http://eega2006.cpuc.ca.gov/Default.aspx)

Non‐Incentives $1.12 $1.19 $0.07 +6%

p pp p g p g f p

Based on the Southern California Gas data, we assume that the non‐incentive program costs by 5% per therm saved (total costs increase more sharply b th b f th d l i )


because the number of therms saved also increases).


Non‐incentive program costs increase due to both the 5% increase in cost per term saved, and the increased number of therms saved.

2019 Costs and Gas Savings Center Point Xcel Integrys2019 Costs and Gas Savings Center Point Xcel Integrys

Scenario 1

Non‐incentives ($Million) $3.67 $2.12 $0.71

Incentives ($Million) $9.29 $6.62 $2.58

Total Programs Costs ($Million) $12 96 $8 74 $3 281 Total Programs Costs ($Million) $12.96 $8.74 $3.28

2019 Potential (10^3 Dthm Savings) 1,004 544 241

Scenario 2

Non‐incentives ($Million) $16.40 $9.45 $3.10

Incentives ($Million) $41.53 $29.48 $11.33

T t l P C t ($Milli ) $57 93 $38 93 $14 432 Total Programs Costs ($Million) $57.93 $38.93 $14.43

2019 Potential (10^3 Dthm Savings) 1,710 930 451

Scenario Non‐incentives ($Million) $56.35 $32.88 $11.25

Incentives ($Million) $142.66 $102.55 $41.06 3 Total Programs Costs ($Million) $199.00 $135.42 $52.31

2019 Potential (10^3 Dthm Savings) 2,388 1,287 636

Scenarios are defined in the Section 7, more detail on program costs is provided in Appendix H


, p g p pp

Program Design: Additional Enhancements – Incentive Approach

Stakeholders commented on the need to provide incentives at key market decision points that can most make a difference. • Minnesota gas utilities have some programs that target incentives to industry actors

ho a o ote the te h olo y to thei u to e e fu a e ebate to the HVACwho can promote the technology to their customers e.g., furnace rebates to the HVAC contractors

• Many utilities are beginning to work collaboratively with manufactures to develop incentive programs that support downstream uptake of efficiency equipment and

h ltechnologies • Ensuring incentives are given to the appropriate audience that can most make a

difference is a key to driving market uptake and transformation • Examples of this include:• Examples of this include:

EnergyStar incentives – some programs provide the majority or all of the incentives to the builder, whose purchase organization generally makes technology selection decision. Others programs provide rebates to builder for technology inclusion and to the consumer for EnergyStar appliancestechnology inclusion, and to the consumer for EnergyStar appliancesSome programs provide dealer rebates for sale of EnergyStar labeled appliances

RecommendationMinnesota Gas Utilities continue to deepen their practice of providing incentives


p p f p gto key market players who can make a difference

Program Design: Additional Enhancements – Outreach

Utilities will likely need to increase channel and trade ally staffing in key market segments that are currently under‐represented and in markets not currently addressed.

• Consistency in utility market presence and approach is a key element for program savings success

• Stakeholder interviews and review of current rebated sub sectors pointed to• Stakeholder interviews and review of current rebated sub‐sectors pointed to the need to “staff‐up” in key market segments

• The need for a presence is especially important in promoting market transformation activities that require a consistent utility approach acrosstransformation activities that require a consistent utility approach across service areas

RecommendationMinnesota Gas Utilities review current staffing levels and needs and integrateMinnesota Gas Utilities review current staffing levels and needs and integrate identified needs into their comprehensive program plans


Program Design: Additional Enhancements – Staffing and Training

To capture savings, enhanced utility staffing and sub‐segment training are recommended.• Minnesota Gas Utilities currently have robust marketing and educational outreach and

training efforts aimed at their customer base and trade allies. Efforts include:training efforts aimed at their customer base and trade allies. Efforts include:— Regular conferences, seminars, mailers, symposia, brown bag lunches — Food services resource center

• The recommended “bundles and market sub‐segmentation” approach necessitates focused industry training and education activities to enhance savings and promote long‐term market transformations

• Key elements of enhanced training should focus: — The need for technically andmarket‐wise account executives in the field whichThe need for technically and market wise account executives in the field, which

requires consistent and professional internal utility technical and sales training, and— Ongoing external training of trade allies, contractors, and other key industry

participants in key market sub‐segmentsB t ti i thi i th ti f tilit t i i t• Best practice in this area is the creation of utility training resource centers

RecommendationUtilities consider establishing broad‐based and ongoing internal and external training programs that are linked directly to market sub‐segment program


training programs that are linked directly to market sub segment program planning and market transformation efforts

Program Design: Additional Enhancements – “Green” Marketing

The Minnesota Gas Utilities may enhance their uptake efforts through linking energy efficiency marketing with “Green” Marketing.

Green Energy Marketing LinkageGreen Energy Marketing Linkage— The Minnesota Gas Utilities currently have successful market outreach programs

focused on brand identification with their energy efficiency efforts— Media attention over the last several years has focused on “Greening America” to

d GHG i ireduce GHG emissions— Energy Efficiency will continue to be in the media based on the new

administration’s announced economic renewal package— Minnesota Gas Utilities should consider creating a marketing approach that links g g pp

energy efficiency with “green”— Program ideas could include the development of a Green/Energy Efficiency labels

that would be given to residences or commercial establishments that undertake to install a group (bundle) of upgrades rather than a single measureg p pg g

RecommendationMinnesota Gas Utilities seek to enhance program uptake by development of an individually branded, but coordinated common “Green‐Gas Efficiency”

k ti d h


marketing and program approach

Program Design: Additional Enhancements – Point of Sale Marketing

Point‐of‐sale marketing can reduce customer and utility transaction costs, but likely will require joint utility efforts to be successful.• Residential market coupons and rebates at the point‐of‐sale have proven successful as a

utility marketing strategy in the U.S• Customers tend to respond to the simplicity of using the incentive or rebate in the

normal course of their shopping rather than through use of utility applications• Several key elements must be in place to ensure success:• Several key elements must be in place to ensure success:

— Joint/collaborative marketing approaches across utility service territories to ensure that chain stores (e.g., Home Deport, Wal‐Mart, Lowes, etc.) can readily participate

— Consistency in utility programs from year‐to‐year, including consistent rebate h h l i b ild fid i h ki l i hi b ili iapproaches, helping build confidence in the working relationship between utilities

and retailers— Individual utility branding within the service territory, but recognizable marketing

feature across all three territories

RecommendationMinnesota Gas Utilities work together to define areas where joint planning and marketing efforts may prove beneficial


Program Design: Additional Enhancements – Collaborative Offerings

To enhance overall market presence and transforming activities, utilities in many states use joint approaches to program design and marketing.• While individual branding of efficiency programs within a service territory is common, many

tiliti l th i ti t d l k t i lifi ti h t d iutilities pool their expertise to develop market simplification approaches to program design, incentives and marketing (e.g., Connecticut, Massachusetts, California)

• Several key advantages accrue from this approach: — Program Recognition: By coordinating consistent incentive designs and marketing

approaches customers within the state become used to consistency in hearing the sameapproaches, customers within the state become used to consistency in hearing the same message over and over again, facilitating enhanced market uptake.

— Avoid Trade Ally Confusion: Interviewed trade allies who work with two or more utilities reported confusion between utility programs, based on differing and changing incentives and marketing focus and approach.F ilit t Ch i St I l t Ch i i f fi d i diffi l l— Facilitate Chain Store Involvement: Chain store operations often find it difficult to unravel competing program designs and approaches, therefore consistency is important.

— Common Applications: Some utilities are beginning to coordinate and streamline their application processes.

— Market Transformation: Utility coordination is critical to overall market transformation asMarket Transformation: Utility coordination is critical to overall market transformation as markets are broader than any individual utility service area.

• Minnesota utilities already have cooperative efforts with electric utilities in areas where benefits accrue to each utility

• Some utilities are considering common Web Platforms for “one‐stop” customer access


g p— e.g., customer access the site, enters their zip code and is directed to their IOUs website for

utility information and associated rebates

Contents

2

1


Introduction


j p pp



Program Design6


Recommendations8


AppendicesA

Achievable Potentials and Costs: Technologies Analyzed

Potentials analysis includes measures currently being rebated by utilities and additional measures NCI calculated to be cost effective1

Commercial IndustrialResidential• Commercial cooking HE ‐ Grocery Stores• Commercial cooking HE ‐ Institutional• Commercial cooking HE ‐ Restaurant• Commercial cooking IR package ‐ Fast Food• Commercial cooking HE Package ‐ Fast Food

• Boiler Reset and cutout control

• Energy Audits • Automatic steam trap monitoring• Condensing heat exchangers (Boilers)• Condensing heat exchangers (Process heat)• Pinch analysis• Flue gas heat recovery• Furnace insulation

• Vented Room heaters (AFUE = 0.78)• Energy Star Programmable Thermostat • Air Sealing• Home insulation ‐ Floor R‐30• Home insulation ‐ Ceiling R‐49• Condensing gas furnaces 92 AFUE • Boiler Reset and cutout control

• Power Vented Unit heaters • Boiler stack damper• Boiler economizer• Incremental roof/ceiling insulation• Modulating IR heater 92% AFUE • Linkageless System with O2 control

• Furnace insulation• Blow‐down steam recovery• Regenerative/recuperative burners• Advanced Combustion Controls • Rankine bottoming cycle• Combined heat and power• Biomass Gasification

Condensing gas furnaces 92 AFUE• Condensing gas furnaces 94 AFUE• High Efficiency Boiler 83 AFUE• Condensing gas furnaces 96 AFUE• Integrated space and water heating CAE = 0.87

• Condensing Boilers 91 AFUEi d i l i fil

g y• High efficiency gas boiler Comb Eff = 0.85• Condensing gas furnaces AFUE 0.92• Condensing Gas Boiler Comb Eff => 0.88 • Boiler Tune‐up • Automatic steam trap monitoring• Condensing gas water heater Thermal Eff = 0 92

• High efficiency gas boiler• Thermal curtains (for greenhouses)

•Window insulation film • Furnace tune‐ups• Regular replacement of furnace filters• Home insulation Insulation‐Wall R‐19• Faucet aerator 1.5 GPM• Low flow showerheads 1.5 GPM• High Efficiency gas water heater EF = 0 62 0.92

• Tankless water heater EF=0.80• Faucet aerator 1.5 GPM• Low flow shower 1.5 GPM• Improved Dishwashers

• High Efficiency gas water heater EF 0.62• Enzymatic laundry detergent• Energy Star Dishwasher (EF=0.65)• Hot Water Pipe Insulation R‐4• Energy Star Clothes Washer (MEF=1.8)• High Efficiency gas water heater EF = 0.67


1: Cost effective measures have a societal TRC > 1Indicated measures are only cost effective when bundled in packages using enhanced program delivery

Achievable Potentials and Costs: Methodology

Calculation of potentials utilizes NCI payback acceptance curves and ramp rates for technologies.

Incentive Policy

Market Acceptance

Program Ramp Rate

Economic Potential

• Calculate the• Start with the • For accelerated• Determine rebates • Calculate the percent of the economic potential adopting the measure based on measure payback and program

• Start with the economic potential for each measure and year

• As each technology targets a different

• For accelerated penetration scenarios, apply ramp rate to reflect transition time to full program rollout and effectiveness

• Determine rebates based on incentive policy for each scenario

• Incentives are used to calculate the new and program

designg

end use, NCI takes only percent of customers with the targeted end use

effectivenesso a u a e e epayback period

Economic potentials

Market Acceptance

Program Ramp Rate

Measure Program P t ti l

X X =


potentials Acceptance Rate Potential


Payback acceptance curves determine the maximum increase in penetration; ramp rates indicate the time taken to reach these levels.

NCI payback acceptance curves determine the increase in penetration of each measure

in response to increased rebates*

Ramp rate curve determines the speed at which programs achieve the full increase in

penetration

80%

100%

on

80%

100%

enetratio

n

Current Payback

NewPayback

Represents that

20%

40%

60%

Pene

tratio

20%

40%

60%

nt of Increased Pe

Increase in Penetration

Represents that penetration has reached NCI’s predicted level

Represents ’ t

0%

0 3 6 9 12 15 18Payback Period of Technology

0%

20%

2008 2010 2012 2014 2016 2018 2020

Percen

*R id i l b k d i d

program’s current penetration

S NCI E i


*Residential payback acceptance curve depicted Source: NCI Estimate


NCI payback acceptance curves used in study are shown below; curves include the effect of willingness factors1

100%

80%

90%

100%

Residential

Residential Behavioral

Commercial

50%

60%

70%

eptance

Industrial Prescriptive

Industrial Energy Audits

Industrial CHP and Biogas

20%

30%

40%Acce Source: DOE and NCI Internal Expertise

0%

10%

20%


0 2 4 6 8 10 12 14Payback Period (Years)

1: Data for curves can be found in Appendix F


Enhanced program scenario models additional uptake of technologies due to marketing and enhanced program design

• Under the enhanced program Effect of Enhanced Programs on• Under the enhanced program design increases in penetration are realized due to the new program design marketing and delivery without an increase in incentives 80%

100%

ion

Effect of Enhanced Programs on Customer Acceptance

Technology Payback

without an increase in incentives• The effect is to increase the uptake

of a measure at a given payback (reduced transaction costs) 40%

60%

80%

mum Pen

etrati

Increase in Penetration

• NCI models the enhanced programs as effectively shifting the payback acceptance curve to the right 0%

20%

0 1 2 3 4 5 6 7 8 9 10

Maxim

0 1 2 3 4 5 6 7 8 9 10Payback Period of Technology

Standard Program DesignEnhanced Program Design



An illustrative example below compares the current penetration and achievable penetrations under Scenario 1 and Scenario 2

Payback Acceptance Under NCI Scenarios Mea u e Pe et atio U de NCI S e a io

80%

100%

n

Payback Acceptance Under NCI Scenarios Measure Penetration Under NCI Scenarios

A

B

Current Penetration

Scenario 1 Penetration100%

60%

80%

um Pen

etratio

n

CC

Sce a io e et atio

Scenario 2 Penetration

60%

80%

enetratio

n

Scenario 2

20%

40%

Maxim

u

Current Payback

NewPayback

A

B

0%

40%

60%

Ach

ieva

ble Pe

Scenario 1

0%

0 1 2 3 4 5 6 7 8 9 10Payback Period of Technology

Standard ProgramDesign

PaybackPayback

0%

20%

2008 2010 2012 2014 2016 2018 2020

Current Penetration


Standard Program DesignEnhanced Program Design

Achievable Potentials and Costs: Scenario Definitions

The program potentials were developed for four program scenarios

Current Programs • Current utility programs continue offering the same measures and incentive levels

Scenario 1: Added measures with Enhanced program d i d k ti

• New technologies that have a TRC > 1 are added to utility programs and given a rebate equal to 25% of incremental cost

• For existing measures, current utility rebates are used• S l id ti l t h l i b dl d t t k i di id ldesign and marketing

at current utility rebate levels

• Several residential technologies are bundled to create packages, individual technologies may not pass the TRC test but the packages do have TRC >1

• Additional uptake of technologies is due to program marketing enhancements beyond the payback ‐ acceptance prediction

Scenario 2:Scenario 2: Added measures with enhanced programs and increased incentive levels

• All measures are given a higher incentive according to the NCI incentive policy

• The calculated rebate to determine measure penetration is based on the measure payback

Scenario 3: Enhanced Program with zero year payback incentives

• Incentives are increased to pay for the full incremental cost for all programs with TRC > 1


p y


Additional potentials were developed to examine potential from behavioral and unconventional measures

Scenario 4: • Additional residential behavioral measures are included in potential Adding residential behavioral measures

analysis, these include: Enzymatic laundry detergent, furnace filter replacement, furnace tune‐ups, and window film insulation

• Residential behavioral measures have a short lifetime, continued savings requires customers to regularly (every 1‐2 years) take action to participate in the program.in the program.

• It is uncertain if customers will adopt these measures, if customers will continue their behavior year after year, and if utilities can claim credit for the savings

Scenario 5: • Additional unconventional industrial measures are added: Biomass Adding unconventional industrial prescriptive measures

gasification, Combined Heat and Power.• Biomass gasification and CHP are drastic process changes for industries• It is uncertain if the utilities can get credit for biomass gasification as is

displaces gas use with another fuel• It is uncertain it the utilities can get credit for the electricity CHP

displaces, gas use may actually increase



For Scenario 2, enhanced rebates were calculated based upon the measures payback (incremental cost/annual energy savings). • Rebate policy examines the technology’s payback period without any utility

i te e tiointervention• Different incentives were assumed for different payback period bins • In most situations Scenario 2 resulted in higher rebates than current utility programs

I it ti h th l l t d b t l th tilit ʹ t b t th

Technology Scenario 3 4 and 5

• In situations where the calculated rebate was lower than a utilityʹs current rebate, the utility’s rebate is used

• Appendix D lists Scenario 2 calculated rebates

Technology Payback Scenario 1 Incentive* Scenario 2 Incentive Scenario 3, 4, and 5

IncentiveLess than 3 years

Pay 50% of incremental cost

Between 3 and Buy‐down payback to 2 yearsPay 25% of

incremental costPay 100% of

incremental cost

Between 3 and 5 years

Buy‐down payback to 2 years

Above 5 years Pay the current gas price as a $/therm saved rebate with a 30% reduction factor in gas savings (cap


g g ( pat 75% of the incremental cost)

*Incentive only applied to new programs, existing rebates are used for existing programs

Achievable Potentials and Costs: Example Calculation

NCI determined the potential for each measure in their applicable sectors and building vintage (new construction or retrofit)• The following slides walk through Common Datag g

the potential calculation for Air Sealing as a residential single family retrofit measureC ti d

Common Data

CenterPoint SF Retrofit Population

Low Gas Commodity Cost ($/DTherm)

Program Cost ($/DTherm Saved)

560,109 $7.01 $5.97

• Common assumptions and technology specific assumptions are shown in the tables to the right

• NCI calculated rebate levels for

Air Sealing Measure Data

Incremental Cost ($2008/ measure) $363

Measure Life (Years) 15

E S i 10%• NCI calculated rebate levels for each scenario and their resulting market penetrations

• Market penetrations determined

Percent Energy Savings 10%

End Use Intensity (Dtherms/HH) 72.2

2009 Gas Savings (DTherms) 7.22pthe total number of participants

• Incentive expenditures and program costs are also calculated

Current Penetration 5%

Maximum Technology Penetration 50%

Gas Space Heating End Use Saturation 98%

Willi F t 80%


Willingness Factor 80%

Achievable Potentials and Costs: Example Calculation

Incentives for Air Sealing increase substantially from Scenario 1 to Scenario 2 driving the increase in participation and savings

Current Program Scenario 1 Scenario 2 Scenario 3

Incentive Amount $0 $91 $272 $363

Participant Cost $363 $272 $91 $0

Annual Cost Savings to customer $51 $51 $51 $51

Payback Period 7.17 5.38 1.80 0.00

2009 2019 2019 2019

Penetration* 5.0% 16.8% 36.6% 39.2%

Annual Rebated Participants 0 3,533 11,809 12,770

Gas saved (Dth) 0 25,511 85,264 92,203Gas saved (Dth) 0 25,511 85,264 92,203

2019 Utility Costs

Incentive Expenditure $0 $320,656 $3,212,166 $4,635,686

Non-Incentive Expenditure $0 $152,302 $509,027 $550,451

Total Cost $0 $472 958 $3 721 193 $5 186 137Total Cost $0 $472,958 $3,721,193 $5,186,137

$/First year Dtherm Saved $0 $19 $44 $56

Annual Rebated Participants = Retrofit Population/Measure Life x Penetration x Willingness Factor

*Baseline penetration determined from NCI research, Scenario penetrations determined from NCI’s payback acceptance curves as previously described


Annual Rebated Participants = Retrofit Population/Measure Life x Penetration x Willingness FactorNon‐Incentive Expenditure = Gas Saved x Program Cost ($/Dth saved)

Achievable Potentials and Costs: Results – CenterPoint Low Gas Price

Th l 2015 t ti l i ld i f 0 58% f l f

Annual Program CostsSavings as a Percent of Sales

The annual 2015 potential savings could increase from 0.58% of sales for current programs to 1.12% in Scenario 2 with program costs increasing by 796%.

2.00%

2.50%


$250

)

Scenario 5 Scenario 4Scenario 3 Scenario 2Scenario 1 Current Programs*

1.50%

nt of Sales

$150

$200

m Cost ($Million)

0.50%

1.00%

Percen

$50

$100

Total Program

0.00%

2009 2011 2013 2015 2017 2019Source: NCI Calculations Source: NCI Calculations

$0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


*NCI estimates that current custom commercial and industrial process rebates are not at a sustainable level, these savings will drop 50% over time due to several reasons: many large customers have already installed large gas saving measures, current rebate levels and program design is not suitable enough to attract the next increment of gas savings that is at a higher cost, and the current economic situation is causing a decrease in customer willingness to invest in large capital projects.

C l ti i b d bl d d S i 2

Achievable Potentials and Costs: Results – CenterPoint Low Gas Price

3 500 000

Cumulative Claimed SavingsAnnual Claimed Savings

Cumulative savings can be doubled under Scenario 2

30 000 000

2,500,000

3,000,000

3,500,000

(Dth)

20 000 000

25,000,000

30,000,000

med (Dth)

Scenario 5Scenario 4Scenario 3Scenario 2Scenario 1

1,500,000

2,000,000

avings Claimed (

15,000,000

20,000,000

ive Savings Claim Current Programs*

500,000

1,000,000

Annual S

5,000,000

10,000,000

Cum

mulati

0


0

2009 2011 2013 2015 2017 2019



Achievable Potentials and Costs: Results ‐ CenterPoint

Present Day Value of Cumulative Benefits and Costs Under Low Price Scenario (2009‐2019)1

Benefits are calculated as the avoided gas cost including externalities, demand savings, and O&M savings

1,600

1,800

$Millions)

Scenario 1 Utility costs:

$11.72/first year Dth saved$1.68/Dth (Levelized cost

of Energy Saved)



of Energy Saved)



of Energy Saved)

1,000

1,200

1,400

ogram Costs ($

200

400

600

800

Cumulative Pr

0

200

Benefits Costs Benefits Costs Benefits Costs2009‐2019 C

Incentives Non‐Incentives Participant Cost


Incentives Non Incentives Participant CostBenefits Medium Gas Price High Gas Price

Source: NCI Calculations1: See Appendix G for data

Achievable Potentials and Costs: Results – CenterPoint

Marginal Cost and Benefit: Low Price Scenario (2009‐2019)

Levelized cost exceeds benefit for Scenario 3 indicating it is not cost effective

$25.94

$25

$30

DTherms)

$19.68

$15

$20

$25

nd Benefit ($/D

$1 68$3.96

$8.83 $9.31 $9.11

$3.88$5.92

$5

$10

$15

Lifetime Cost an

Low Gas Price + Environmental Externalities

$1.68

$0

Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5Measure L

T t l L li d C t M i l C t


Total Levelized Cost Marginal Cost

Source: NCI Calculations

Achievable Potentials and Costs: Results – Xcel Low Gas Price




2.00%

2.50%


$140

$160

$180

)


1.50%

nt of Sales

$100

$120

$140

m Cost ($Million)

0.50%

1.00%

Percen

$40

$60

$80

Total Program

0.00%


$0

$20

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019



C l ti i b d bl d d S i 2

Achievable Potentials and Costs: Results – Xcel Low Gas Price

1 800 000


Cumulative savings can be doubled under Scenario 2

16 000 000

1

1,400,000

1,600,000

1,800,000

(Dth) 12,000,000

14,000,000

16,000,000

med (Dth)


800,000

1,000,000

1,200,000

avings Claimed (

6,000,000

8,000,000

10,000,000


200,000

400,000

600,000

Annual S

2,000,000

4,000,000

, ,

Cum

mulati

0


0

2009 2011 2013 2015 2017 2019



Achievable Potentials and Costs: Results – Xcel



1,400

1,600

$Millions)



of Energy Saved)



of Energy Saved)



of Energy Saved)

800

1,000

1,200

ogram Costs ($

200

400

600

800

Cumulative Pr

0

200






Achievable Potentials and Costs: Results – Xcel


Levelized cost exceeds benefit for Scenario 3 indicating it is not cost effective

$29.59$26 4$30

$35

DTherms)

$26.54

$20

$25

$30

nd Benefit ($/D

$1 99$4.45

$7.35

$3.86

$11.51$11.54$11.17

$5

$10

$15

Lifetime Cost an

Low Gas Price + Environmental Externalities

$1.99

$0

$5


A L li d C t M i l C t


Average Levelized Cost Marginal Cost


Achievable Potentials and Costs: Results – Integrys Low Gas Price




1.40%

1.60%


$70

$80

)


0.80%

1.00%

1.20%

nt of Sales

$40

$50

$60

m Cost ($Million)

0.40%

0.60%Percen

$10

$20

$30

Total Progra

0.00%

0.20%


$0

$10

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


*NCI does not estimate a decrease in Integrys’ custom program savings under the Current Programs Scenario. Integrys counts savings for boilers and other such broad application measures under “custom” programs. This differs from Xcel and CenterPoint’s custom projects that feature large , unique projects that are not broadly applicable. Since NCI estimates that savings from other broadly applicable measures will continue at their same level under Current Programs, Integrys’ “custom” programs will as well.

C l ti i th t d bl d S i 2

Achievable Potentials and Costs: Results – Integrys Low Gas Price

900 000


Cumulative savings can more that double under Scenario 2

8 000 000

700,000

800,000

900,000

(Dth) 6,000,000

7,000,000

8,000,000

med (Dth)


400,000

500,000

600,000

avings Claimed (

3,000,000

4,000,000

5,000,000


100,000

200,000

300,000

Annual S

1,000,000

2,000,000

, ,

Cum

mulati

0


0

2009 2011 2013 2015 2017 2019


*NCI does not estimate a decrease in Integrys’ custom program savings under the Current Programs Scenario. Integrys’ counts savings for boilers and other such broad application measures under “custom” programs. This differs from Xcel and CenterPoint’s custom projects that feature large , unique projects that are not broadly applicable. Since NCI estimates that savings from other broadly applicable measures will continue at their same level under Current Programs, Integrys’ “custom” programs will as well.

Achievable Potentials and Costs: Results – Integrys



1,500

$Millions)



of Energy Saved)



of Energy Saved)



of Energy Saved)

900

1,200

ogram Costs ($

300

600

Cumulative Pr

0






Achievable Potentials and Costs: Results – Integrys


Marginal cost exceeds marginal benefit for Scenario 3 indicating it is not optimal

$24.66$25

$30

DTherms)

$18.95

$15

$20

$25

nd Benefit ($/D

$1 67$3.30

$7.82 $8.23 $8.06

$4.81 $3.85$5

$10

$15

Lifetime Cost an

Benefit = Low Gas Price + Environmental Externalities

$1.67

$0


A L li d C t M i l C t


Average Levelized Cost Marginal Cost


Achievable Potentials and Costs: Results – TRCs

Societal TRC and Utility Test decreases as scenario incentives increase

Center Point Xcel Integrys

2019 Gas Saving (000 Dth)

Societal TRC

Utility Test

Net Benefit ($M)1


Societal TRC

Utility Test

Net Benefit ($M) 1


Societal TRC

Utility Test

Net Benefit ($M) 1

Scenario 1 1,004 1.76 4.86 $168 544 1.52 4.17 $99 241 2.10 4.93 $68

Scenario 2 1,710 1.66 2.18 $327 930 1.43 1.89 $157 451 1.96 2.65 $127

Scenario 3 2,388 1.01 0.97 $6 1,287 0.79 0.77 ‐$182 636 1.15 1.11 $45

Scenario 4 3,158 0.93 0.90 ‐$86 1,712 0.76 0.73 ‐$234 836 1.07 1.03 $23

Scenario 5 3,204 0.95 0.92 ‐$59 1,721 0.76 0.73 ‐$232 873 1.09 1.05 $31

1: Net Benefits are the present day value of societal benefits minus societal costs from all measures installed during 2009‐2019


More details on program costs are provided in Appendix H

Achievable Potentials and Costs: Results ‐ Energy

NCI calculated cumulative technical, economic, and program potentials over the next 10 years for each utility

Technical, Economic, and Achievable Potentials

50,000,000

60,000,000

ntial (DTh) XcelCenterPoint Integrys

30,000,000

40,000,000

e Savings Poten

10,000,000

20,000,000

019 Cumulative

0

Tech Econ Achvbl Tech Econ Achvbl Tech Econ Achvbl

2009‐20

Current Programs Scenario 1 Scenario 2 Scenario 3Scenario 5 Technical Pot Econ (low) Econ (Med)



Scenario 5 Technical Pot Econ (low) Econ (Med)Econ (High) Medium Gas Price High Gas Price


The Legislated Energy Efficiency target translates to a cumulative savings of 15% over the next 10 years

Potentials as a Percentage of 2019 Forecasted Sales

30%

35%

40%

ential (DTh) XcelCenterPoint Integrys

20%

25%

30%

ve Savings Pote

1 5% Goal

5%

10%

15%

019 Cumulativ 1.5% Goal

0%

Tech Econ Achvbl Tech Econ Achvbl Tech Econ Achvbl

2009‐20

Current Programs Scenario 1 Scenario 2 Scenario 3Scenario 5 Technical Pot Econ (low) Econ (Med)


Scenario 5 Technical Pot Econ (low) Econ (Med)Econ (High) Medium Gas Price High Gas Price



Each utility has a different distribution of potential among the three sectors as a result of their varying customer bases

Potentials by Sector

40,000,000

45,000,000

DTh)

XcelCenterPoint Integrys

25,000,000

30,000,000

35,000,000

ve Potential (D

10,000,000

15,000,000

20,000,000

2019 Cumulativ

0

5,000,000

Econ. Scn 1 Scn 2 Sc 3 Econ. Scn 1 Scn 2 Sc 3 Econ. Scn 1 Scn 2 Sc 3

2009‐2


124

Residential Commercial Industrial Medium Gas Price High Gas Price


Contents

2

1


Introduction


j p pp



Program Design6


Recommendations8


AppendicesA

Recommendations: Overview

Based on legislative mandates and stakeholder interviews. NCI identified a number of policy issues that if addressed may further enhance gas savings.Regulatory Issues (Statute 216B.2401)

— Direct Program Savings — Rate design— Codes and Standards (C&S) impacts on program/portfolio baselines— Market Transformation and Behavior— Utility Infrastructure

Other Policy Issues— Criteria for program cost‐effectiveness— Regulatory Reporting


Recommendation: Rate Design

Rate design for gas utilities to promote energy efficiency can support legislative efforts to enhance savings.

• Two general rate design approaches have been used nationally to support• Two general rate design approaches have been used nationally to support utility energy efficiency program efforts. One of these is customer focused and the other is utility focused.

• These approaches includepp— Tiered Rate Structures (customer focus)— Decoupling Mechanisms (utility focus)


Recommendation: Rate Design

Tiered rate structures assess higher‐rates for higher‐usage to consumers can provide energy savings, but need to be coupled with ratemaking that supports utility’s financial health.• At the customer level, some utilities have implemented tiered rate structures

to promote energy savings, using higher prices at higher usage as a disincentive to use

• Tiered rate structures design must take into account low income customer• Tiered rate structures design must take into account low‐income customer impacts

• Tiered rate structures need to be viewed in conjunction with overall rate designs, especially full decoupling, to ensure that fixed costs are neither over‐designs, especially full decoupling, to ensure that fixed costs are neither overnor under‐recovered.

Recommendation

Tiered rate structures should not be proposed at this time without direct linkages to a full revenue decoupling mechanism


Recommendation: Policy ‐ Decoupling

Decoupling mechanisms have worked well in other states to remove utility disincentives to aggressive pursuit of energy efficiency savings.

• Minnesota’s “Next Generation Energy Act of 2007” addresses this issue and calls• Minnesota s Next Generation Energy Act of 2007 addresses this issue and calls for pilot rate design test (Sb2007 c 136 art ş 6 Subd. 3) to allow “one or more utilities to participate in a pilot program to assess the merits of a rate‐decoupling strategy to promote energy efficiency.”

• Thirty states have adopted rate designs that decouples fixed cost recovery from gas sales with another 9 states considering such a policy

• Full revenue decoupling has been effective in removing utility disincentives to ti ffi i i t t h it h d t dpromoting energy efficiency in states where it has adopted.

Recommendation

Minnesota Gas Utilities should seek to participate in a full revenue decoupling pilot program established under the Act


Recommendation: Policy – Codes & Standards

Code adoption of mature efficiency technologies impact utility programs even as the utility program marketing helps promote them.• Utilities are largely responsible for marketing

d ff h l Codes and Standards Californiaand promoting energy efficiency technologies, both new and mature ones

• Adoption by code agencies of mature energy efficiency technologies impacts the baseline of programmatic savings that utilities may claim

Codes and Standards California• Codes are up for renewal every 5 years, providing the opportunity for utilities to support code changes and potentially claim energy savings from adoption of mature programmatic savings that utilities may claim

• Utility codes and standards programs provide code adoption agencies with case studies, market assessments and other support on technology maturity to help the agencies make

technologies in new codes deliberationsDetermining market penetration if the standard had not been implemented Portion of savings can potentially be attributed to the utility activities.gy y p g

well informed decisions• Best practices nationally is for utilities to be

credited with a portion of the savings from adoption into code of new energy efficiency technologies

attributed to the utility activities.• California allows up IOUs to claim up to 50% of savings from code improvements based on an agreed upon formula between regulators and utilities

technologies

Recommendation

Utilities work with code agencies to develop a meaningful C&S


support program that can result in utility attribution of some savings

Recommendation: Policy – Codes & Standards

Utilities have limited impact on appliance standard adoption, which is federal, but can influence take‐up of higher efficiency appliances• Federal appliance standard preempt state and utility adoption of appliance pp p p y p pp

standards • In the areas of appliances, utilities play a major role in market transformation

by promoting, were cost‐effective, EnergyStar appliances• The likely adoption of national GHG legislation may influence national

appliance standards• The best role utilities can play to market and promote appliance rebate

d f h h h lprograms is to provide incentives for the highest energy savings appliances available on the market, thereby pushing the market ever higher

Recommendation

Minnesota Gas Utilities should consider deepening tiered incentives programs to facilitate market transformation and take‐up of highest efficiency appliances available and integrate this approach with the

d d C d d S d d


recommended Codes and Standards program

Recommendation: Policy – Market Transformation

Transforming markets requires perseverance, dedication and coordination of major actors to determine how best to attribute savings

• Market transformation approaches are proving successful through: Educational Outreachthrough:— Voluntary collaborative efforts with industry to reduce

usage (e.g., U.S. DOE’s Commercial Alliance Program; Collaborative; EPA’s Industry Segment program)

— “Indirect” broad‐based educational outreach and

1. Development of Resource Centers• Similar to CenterPoint’sFoodservice Training Facility

• Used for comprehensive d fmarketing efforts that link to utility programs (Flex

Your Power)— Marketing activities that support point‐of sale

efficiency purchasesS b h l d h b

industry specific seminars, training of trades, showcase and demonstrate technologies, internal staff training

• Cost of educational facility to be • Some programmatic behavior related approaches are being

developed by utilities (e.g., cold‐water detergents), but will take time

• Other approaches including state‐based loan and other programs energy efficiency mortgages and tax rebates

yspread across all programs

2. Increased budget for educational outreach program• Claim indirect savings

programs, energy efficiency mortgages and tax rebates

Recommendation

Minnesota Utilities consider collaborating with the National EPA and DOE programs as a means of enhancing program uptake *


programs as a means of enhancing program uptake.*While NCI recommends gas utilities undertake extensive market segmentation activities, until the issue of “attribution” is addressed, costs recovery of market transformation programs may not occur.

Recommendation: Policy – Utility Infrastructure

Utility infrastructure improvements are generally focused on the electric sector and not applicable to natural gas utilities

• Natural gas distribution utilities have unique infrastructure needs and do not• Natural gas distribution utilities have unique infrastructure needs and do not possess the same kind of potential infrastructure improvements as may be available in the electric industry

• Electric industry generation process and transmission line losses provide y g p popportunities to capture savings.

• The same kind of generation and transmission loss mitigation through conservation efforts do not appear to be applicable to the natural gas utility d li tdelivery sector

• Natural gas losses for the distribution are typically less than 2%. — There may be opportunities to improve heat rates of utility and customer

owned electric generation that were not examined in this studyowned electric generation that were not examined in this study


Recommendation: Policy – Portfolio Cost‐Effectiveness

Cost‐effectiveness criteria at the portfolio level rather than at the program level allows flexibility in utility pursuit of energy savings and can speed overall market transformation• As a best practice, several state regulatory bodies have approved utility

energy efficiency filing based on portfolio cost‐effectiveness. • In this approach cost‐effective programs may “pull” along programs in

market segments where sa ings can be garnered but where a program maymarket segments where savings can be garnered, but where a program may not meet the TRC test

• A major benefit of this approach is that it allows utilities the flexibility to implement programs that do not quite meet TRC of 1, yet are important toimplement programs that do not quite meet TRC of 1, yet are important to overall portfolio savings, and overall market transformation (e.g., many residential new construction programs; some residential retrofit programs)

RecommendationRecommendation

Minnesota Gas Utilities consider requesting portfolio level approval of energy efficiency filings


Recommendation: Policy – Portfolio Cost‐Effectiveness

Short term vs. long term natural gas “avoided” cost estimates play a large roll in utility portfolio design and cost

• St d d t ff ti t t t d t f th h t t id d t• Standard cost‐effectiveness tests tend to focus on the short term avoided cost estimates

• To meet goals related to the passage of Minnesota Statute 216B.2401, and those expected with the likely passage of national GHG legislation, Minnesotathose expected with the likely passage of national GHG legislation, Minnesota natural gas providers will need to plan for the long‐term to capture energy efficiency savings as a significant resource

• Dialogue between regulator and utilities to determine the best approach to g g ppaddressing this issue can result in agreed upon approaches that continue to provide utilities the impetus to plan for energy efficiency savings in the long‐runRecommendationRecommendation

Minnesota Gas Utilities consider opening a dialogue with Regulators to address these cost issues, especially in relation to expected impact of

the passage of national GHG policy


the passage of national GHG policy

Recommendation: Policy – Reporting

Stakeholders interviewed pointed repeatedly to the increase in the amount of data needing to be gathered from customers as a disincentive to participation

• Best Practice related to regulatory reporting requirements has meant reduction in the amount of data required from the utility as a means of helping facilitate customer participation (e.g., Vermont; California)

Recommendation

Minnesota Gas Utilities work with Regulators to develop reporting requirement that both meet regulatory needs

and support market uptake of energy efficiency programs


Recommendation: Policy – Biogas

Several state agencies and regulatory bodies support utility displacement of natural gas with biogas resources• Utilities in Idaho, California and Vermont have programs to assist customers p g

in developing biogas to improve the customers’ total energy efficiency, reduce reliance on pipeline gas, and reduce environmental footprint.

• Use of “cow‐power” is promoted widely in other states e.g., Michigan, Wi i A iWisconsin, Arizona

• Biogas from wastewater treatment plants and landfills provide further potential. NCI estimates that statewide wastewater treatment plants in could generate 162 000 DekaTherms annually in 2019 (technical potential)generate 162,000 DekaTherms annually in 2019 (technical potential)

• The displacement of natural gas with biomass resources replaces a non‐renewable resource with a renewable one

• Biogas to offset purchases of pipeline gas should be credited towards meeting• Biogas to offset purchases of pipeline gas should be credited towards meeting energy efficiency goals.

Recommendation

Mi t G Utiliti d l bi l t


Minnesota Gas Utilities develop biogas program proposals to integrate into their efficiency portfolio filings

Contents

2

1


Introduction


j p pp



Program Design6


Recommendations8


AppendicesA

References

• CenterPoint Energy. 2007 CIP Status Report. 2008 • Department of Energy. Appliance and Commercial Equipment Standards.

htt // 1 /b ildi / li t d d / id ti l/fb f l i ht l 2008<http://www1.eere.energy.gov/buildings/appliance_standards/residential/fb_fr_analysis.html>. 2008 • Department of Energy. ENERGY STAR Residential Water Heaters: Final Criteria Analysis. 2008 • Energy Information Administration. Commercial Building Energy Consumption Survey. <http://www.eia.doe.gov/emeu/cbecs/>. 2003

• Energy Information Administration. Manufacturing Energy Consumption Survey. <http://www.eia.doe.gov/emeu/mecs/>. 2002

• Energy Information Administration. Residential Energy Consumption Survey. <http://www.eia.doe.gov/emeu/recs/>. 2005

• MidAmerican Energy Company. Energy Efficiency Plan (Docket No. EEP‐08‐2). 2008 • Minnesota Deemed Savings Database. Docket No. E,999/CIP‐08‐272 • Minnesota Energy Resources Company. 2009 NMU Conservation Improvement Program. 2008 • Minnesota Energy Resources Company 2009 PNG Conservation Improvement Program 2008• Minnesota Energy Resources Company. 2009 PNG Conservation Improvement Program. 2008 • NYSERDA. Natural Gas Energy Efficiency Resource Development Potential In New York. 2006 • Puget Sound Energy. Comprehensive Assessment of Demand‐Side Resource Potentials. 2007 • Xcel Energy. 2007 Status Report. (Docket No. E,G002/CIP‐06‐08). 2008


gy p ( )

Appendices

Appendix A: Utility Sales ForecastsAppendix B: Natural Gas Price ForecastAppendix B: Natural Gas Price ForecastAppendix C: Technology ScreeningAppendix D: Measures DatabaseA di E E h l lAppendix E: Economic Technical PotentialsAppendix F: Payback AcceptanceAppendix G: Industrial General MeasuresAppendix H: Scenario Program Cost TablesAppendix I: Program Design Best Practices


Appendix A: Gas Sales Forecast

Gas Sales Forecast ‐ Data TableGas Sales Forecast (Dtherms)

Utility Sector 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

CenterPoint

Residential 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500

Commercial 48,355,844 48,355,844 48,527,751 48,806,130 49,070,091 49,225,362 49,653,101 50,082,978 50,515,004 50,949,191 51,385,549 51,824,088

Industrial 31,869,540 31,869,540 31,982,838 32,166,307 32,340,273 32,442,607 32,724,513 33,007,829 33,292,562 33,578,718 33,866,306 34,155,331

Total 147,755,884 147,755,884 148,041,089 148,502,937 148,940,865 149,198,469 149,908,114 150,621,307 151,338,067 152,058,410 152,782,354 153,509,919

Xcel

Residential 36,400,000 36,600,000 36,900,000 37,100,000 37,300,000 37,500,000 37,700,000 37,800,000 38,000,000 38,200,000 38,300,000 38,500,000

Commercial 33,100,000 38,600,000 38,700,000 39,800,000 41,100,000 40,600,000 40,800,000 41,100,000 41,400,000 41,500,000 41,800,000 42,000,000

Industrial 6,100,000 7,200,000 7,200,000 7,400,000 7,600,000 7,500,000 7,600,000 7,600,000 7,700,000 7,700,000 7,700,000 7,800,000

Total 75,600,000 82,400,000 82,800,000 84,300,000 86,000,000 85,600,000 86,100,000 86,500,000 87,100,000 87,400,000 87,800,000 88,300,000

Integrys

Residential 12,700,000 12,600,000 12,500,000 12,400,000 12,400,000 12,300,000 12,200,000 12,100,000 12,100,000 12,000,000 11,800,000 11,823,184

Commercial 15,300,000 14,900,000 14,800,000 14,800,000 14,900,000 15,000,000 14,900,000 14,900,000 14,800,000 14,800,000 14,600,000 14,628,416

Industrial 26,200,000 24,000,000 23,900,000 23,900,000 24,400,000 25,200,000 25,300,000 25,300,000 25,300,000 25,400,000 25,400,000 25,449,389

Total 54,200,000 51,500,000 51,200,000 51,100,000 51,700,000 52,500,000 52,400,000 52,300,000 52,200,000 52,200,000 51,800,000 51,900,989

State Total

Residential 116,630,500 116,730,500 116,930,500 117,030,500 117,230,500 117,330,500 117,430,500 117,430,500 117,630,500 117,730,500 117,630,500 117,853,684

Commercial 96,755,844 101,855,844 102,027,751 103,406,130 105,070,091 104,825,362 105,353,101 106,082,978 106,715,004 107,249,191 107,785,549 108,452,504

I d i l


Industrial 64,169,540 63,069,540 63,082,838 63,466,307 64,340,273 65,142,607 65,624,513 65,907,829 66,292,562 66,678,718 66,966,306 67,404,720

Total 277,555,884 281,655,884 282,041,089 283,902,937 286,640,865 287,298,469 288,408,114 289,421,307 290,638,067 291,658,410 292,382,354 293,710,908

Appendix A: Gas Sales Forecast

Residential Gas Sales Forecast – Data Table

Gas Sales (Dtherms)

Utility Forecast 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Utility Forecast 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

CenterPoint

Utility Forecast 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500 67,530,500

NCI Forecast 67,456,136 67,223,064 67,108,779 67,067,790 67,137,115 67,193,611 67,281,067 67,355,319 67,416,785 67,465,870 67,502,974

X l


XcelNCI

Forecast 36,307,645 36,553,363 36,805,870 37,039,875 37,254,609 37,442,667 37,616,543 37,792,888 37,964,740 38,127,201 38,285,482

Integrys


NCI Forecast 17,213,905 17,131,951 17,050,924 16,970,823 16,891,643 16,813,382 16,740,974 16,666,920 16,591,310 16,514,230 16,435,762


Appendix B: Natural Gas Price Forecast

$200.00

•NCI assumes oil prices to decline from September high

Annual Average Oil Price Assumption 2008‐2030

$160.00

$180.00p p g

levels to low 90’s (real terms) level in real terms over the next 8 years, before increasing back to today’s levels over the term of the forecast period.

•Oil forecast developed using current NYMEX strip.

$120 00

$140.00

er Barrel Real 2007

Nominal

$100.00

$120.00p

$60.00

$80.00


$

2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030Developed September 2008


Forecast of Monthly Henry Hub Gas Price 2008‐2030$25.00

$20.00

N i l$15.00

er MMBtu

Nominal Real (2007)

$5 00

$10.00pe

$‐

$5.00


2008 2013 2018 2023 2028Source: NCI Forecast, September 2008


$12.00

Forecast Comparison of Annual Henry Hub Gas Price 2008‐2018 (Nominal $/MMBtu)

• As seen in this chart and the

$10.00

$11.00

u

following, NCI’s 2008 Base Case (Fall Update) price forecast at Henry Hub is higher than both EIA’s AEO2008 and Xcel’s price forecasts over the majority of the 10 year period (with the

$8.00

$9.00minal $/MMBtu10‐year period (with the

exception of the first 2 years as compared to Xcel).

• NCI’s price forecast is driven by a number of key supply and demand fundamentals as well as

$5 00

$6.00

$7.00

Nom

NCI ‐ Henry HubXcel ‐ NYMEX

demand fundamentals as well as the assumed oil prices. This forecast particularly reflects higher US natural gas production starting in 2008 that ramps up sharply through 2025 b f l li ff Thi

$4.00

$5.00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

EIA AEO2008 ‐ Henry Hubbefore leveling off. This increased production from US natural gas production reflects NCIʹs recent analysis of US production and in particular unconventional gas shales.


unconventional gas shales.Note ‐ From information provided by Xcel, the Xcel NYMEX forecast is based on a NYMEX strip (8/27/08) through May 2014 before switching to a long‐term composite of EIA, CERA, PERA and Global Insights for the remainder of the forecast period.Source: NCI Forecast, September 2008


$12.00

Forecast Comparison of Annual Henry Hub Gas Price 2008‐2018 (Real 2007 $/MMBtu)

$10.00

$11.00

$8.00

$9.00

2007$/MMBtu

$6.00

$7.00

Real 2

NCI ‐ Henry HubXcel ‐NYMEX

$4.00

$5.00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Xcel NYMEXEIA AEO2008 ‐ Henry Hub


Note: A CPI of 2.2% per year was used to deflate Nominal $ to Real 2007 $.


$12.00

Forecast Comparison of Annual Northern (Demarcation)Gas Price 2008‐2018 (Nominal $/MMBtu)

• NCI’s 2008 Base Case (Fall

$10.00

$11.00

u

(Update) price forecast at the Northern (Demarcation) point is higher in all 10‐years of the forecast and increases to a difference of $1 63/MMBtu in 2018

$7 00

$8.00

$9.00minal $/MMBtu$1.63/MMBtu in 2018.

$5.00

$6.00

$7.00

Nom

NCI ‐ Demarc

Xcel Demarc

$4.00

$

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Xcel ‐ Demarc

Note ‐ From information provided by Xcel, the Xcel Demarc forecast is derived through a


o e o i o a io p o i e y e , e e e a o e a i e i e oug abasis differential to Henry Hub, by using a Demarc basis from Anmerex (broker) basis through Mar 2009, NYMEX Clearport OTC through Aug 2013, and a repeat profile for the remainder of the forecast period.


$12.00

Forecast Comparison of Annual Northern (Ventura)Gas Price 2008‐2018 (Nominal $/MMBtu)

• NCI’s 2008 Base Case (Fall

$10.00

$11.00

u

• NCI s 2008 Base Case (Fall Update) price forecast at the Northern (Ventura) point is nearly identical for the first two years of the forecast before increasing to a diff f $1 41/MMB i

$7 00

$8.00

$9.00minal $/MMBtudifference of $1.41/MMBtu in

2018.

$5.00

$6.00

$7.00

Nom

NCI ‐ Ventura

Xcel Ventura

$4.00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Xcel ‐ Ventura

Note ‐ From information provided by Xcel, the Xcel Ventura forecast is derived through a


o e o i o a io p o i e y e , e e e u a o e a i e i e oug abasis differential to Henry Hub, by using a Ventura basis from Anmerex (broker) basis through Mar 2009, NYMEX Clearport OTC through Oct 2013, and a repeat profile for the remainder of the forecast period.


Forecast Comparison of Basis 2008‐2018 (Nominal $/MMBtu)

$‐

$(0.20)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$(0.40)

l $/MMBtu

$(0.60)

Nomina

$(1.00)

$(0.80)

NCI ‐ Demarc Basis Xcel ‐ Demarc Basis

NCI ‐ Ventura Basis Xcel ‐ Ventura Basis



Map of Northern Natural Gas Pipeline and Market Price Points



Forecast Price Comparisons (Base Case) 2008‐2018 (Nominal $/MMBtu)

EIA AEO 2008 (Nominal$/MMBtu)

NCI 2008 Base Case Update (Nominal $/MMBtu)

Xcel Forecasts (Nominal $/MMBtu)

Date Henry Hub Henry HubNORTHERN (DEMARC)

NORTHERN (VENTURA) NYMEX DEMARC VENTURADate Henry Hub Henry Hub ( E A C) ( EN U A) NYMEX E A C EN U A

2008 7.614 9.468 8.596 8.898 9.541 8.549 8.9402009 7.919 9.116 8.827 9.000 9.309 8.658 8.9932010 7.580 9.505 9.213 9.388 9.271 8.731 9.0002011 7.350 9.406 9.132 9.267 9.023 8.484 8.7692012 7.288 9.030 8.777 8.755 8.831 8.291 8.5762013 7.203 8.952 8.706 8.673 8.679 8.139 8.4252014 7.156 9.056 8.812 8.818 8.199 7.660 7.9452015 7.164 9.192 8.960 8.988 7.968 7.428 7.7142016 7.265 9.314 9.082 9.136 8.163 7.623 7.9082017 7.517 9.675 9.435 9.509 8.426 7.886 8.1722018 7 787 10 063 9 803 9 870 8 717 8 177 8 4622018 7.787 10.063 9.803 9.870 8.717 8.177 8.462

EIA AEO 2008 Henry Hub forecast was converted from Real 2006$/MMBtu to Nominal$/MMBtu using NCI’s CPI assumptions of 2.2% year‐over‐year growth.

September 2008


NCI Henry Hub forecast for 2008 consists of actuals through August and a 10‐day average NYMEX strip (8/9 – 8/22) for remainder of year. The NYMEX strip is carried through February 2010 before the forecast reverts to a long‐term fundamental forecast.


Forecast Price Comparisons (Base Case) 2008‐2018 (Real 2007$/MMBtu)

EIA AEO 2008 (Real 2007$/MMBtu)

NCI 2008 Base Case Update (Real 2007$/MMBtu)

Xcel Forecasts (Real 2007$/MMBtu)

Date Henry Hub Henry HubNORTHERN (DEMARC)

NORTHERN (VENTURA) NYMEX DEMARC VENTURA

2008 $7.427 $9.235 $8.385 $8.679 $9.307 $8.339 $8.7202009 7.548 8.688 8.413 8.577 8.872 8.251 8.5712010 7.089 8.890 8.617 8.781 8.670 8.166 8.4172011 6.739 8.625 8.373 8.498 8.274 7.779 8.0412012 6.542 8.106 7.879 7.859 7.927 7.442 7.6982013 6 327 7 862 7 647 7 617 7 623 7 149 7 4002013 6.327 7.862 7.647 7.617 7.623 7.149 7.4002014 6.150 7.783 7.573 7.578 7.047 6.583 6.8282015 6.024 7.730 7.535 7.558 6.700 6.246 6.4872016 5.978 7.664 7.473 7.517 6.716 6.272 6.5072017 6.052 7.790 7.596 7.655 6.784 6.349 6.5792018 6 134 7 928 7 722 7 776 6 867 6 441 6 6662018 6.134 7.928 7.722 7.776 6.867 6.441 6.666

September 2008


Note: NCI assumes a CPI of 2.2% per year to deflate Nominal $ to Real 2007$.


Forecast Price Comparisons (Base, Low, and High Cases) 2008‐2018 (Nominal $/MMBtu)

NCI 2008 Base Case (Fall Update)(Nominal $/MMBtu)

NCI 2008 Low Case (Fall Update)(Nominal $/MMBtu)

NCI 2008 High Case (Fall Update) (Nominal $/MMBtu)

NORTHERN NORTHERN NORTHERN NORTHERN NORTHERN NORTHERN Date Henry Hub (DEMARC) (VENTURA) Henry Hub (DEMARC) (VENTURA) Henry Hub (DEMARC) (VENTURA)2008 $9.468 $8.596 $8.898 $7.038 $6.147 $7.637 $16.506 $14.743 $15.3822009 9.116 8.827 9.000 6.685 6.377 7.797 15.801 15.204 15.5862010 9.505 9.213 9.388 7.077 6.764 8.568 16.583 15.977 16.3622011 9.406 9.132 9.267 6.977 6.685 8.324 16.383 15.817 16.1212012 9 030 8 777 8 755 6 600 6 328 7 302 15 630 15 105 15 0972012 9.030 8.777 8.755 6.600 6.328 7.302 15.630 15.105 15.0972013 8.952 8.706 8.673 6.521 6.258 7.136 15.473 14.964 14.9312014 9.056 8.812 8.818 6.627 6.364 7.432 15.683 15.176 15.2222015 9.192 8.960 8.988 6.761 6.512 7.767 15.953 15.472 15.5612016 9.314 9.082 9.136 6.883 6.632 8.065 16.197 15.715 15.8582017 9.675 9.435 9.509 7.244 6.986 8.808 16.920 16.422 16.6012018 10 063 9 803 9 870 7 633 7 355 9 531 17 696 17 157 17 3242018 10.063 9.803 9.870 7.633 7.355 9.531 17.696 17.157 17.324

September 2008



Forecast Basis Comparisons 2008‐2018 (Nominal $/MMBtu)

NCI 2008 Base Case Update (Nominal $/MMBtu)

Xcel Forecasts (Nominal $/MMBtu)

D t

NORTHERN (DEMARC) Ba i

NORTHERN (VENTURA)

Ba i

NORTHERN (DEMARC) Ba i

NORTHERN (VENTURA)

Ba iDate Basis Basis Basis Basis2008 ‐$0.079 ‐$0.038 ‐$0.262 ‐$0.1382009 ‐0.289 ‐0.116 ‐0.651 ‐0.3162010 ‐0.292 ‐0.117 ‐0.540 ‐0.2712011 ‐0.274 ‐0.138 ‐0.540 ‐0.2542012 ‐0.253 ‐0.275 ‐0.540 ‐0.2542012 0.253 0.275 0.540 0.2542013 ‐0.245 ‐0.279 ‐0.540 ‐0.2542014 ‐0.244 ‐0.238 ‐0.540 ‐0.2542015 ‐0.232 ‐0.204 ‐0.540 ‐0.2542016 ‐0.232 ‐0.178 ‐0.540 ‐0.2542017 ‐0.240 ‐0.167 ‐0.540 ‐0.2542018 ‐0.261 ‐0.193 ‐0.540 ‐0.254



Forecast Price Comparisons 2008‐2018 (Real 2007$/MMBtu)

NCI 2008 Base Case Update (Real 2007$/MMBtu) Xcel Forecasts

Date

NORTHERN (DEMARC) Basis

NORTHERN (VENTURA)

Basis

NORTHERN (DEMARC) Basis

NORTHERN (VENTURA)

Basis2008 ‐$0.077 ‐$0.037 ‐$0.255 ‐$0.1352009 ‐0.275 ‐0.110 ‐0.621 ‐0.3022010 ‐0.273 ‐0.110 ‐0.505 ‐0.2532011 ‐0.251 ‐0.127 ‐0.495 ‐0.2332012 ‐0.227 ‐0.246 ‐0.485 ‐0.2282013 0 216 0 245 0 474 0 2232013 ‐0.216 ‐0.245 ‐0.474 ‐0.2232014 ‐0.210 ‐0.204 ‐0.464 ‐0.2182015 ‐0.195 ‐0.172 ‐0.454 ‐0.2142016 ‐0.191 ‐0.146 ‐0.444 ‐0.2092017 ‐0.193 ‐0.134 ‐0.435 ‐0.2052018 ‐0 205 ‐0 152 ‐0 425 ‐0 2002018 0.205 0.152 0.425 0.200


Appendix C: Technology Screening

Residential measuresNCI Initial Score

Technology End Use(s) Energy S i

Market growth Maturity Economics Composite

Sgy ( ) Savings gpotential

y Score

Condensing gas furnaces Space Heating 3 3 3 3 3

Condensing Boilers Space Heating 3 2 3 3 2.8

Tankless water heater Water Heating 3 3 2 3 2.8

C ti C ki 2 3 3 2 2 4Convection oven Cooking 2 3 3 2 2.4

Condensing gas water heater Water Heating 3 2 2 2 2.3

Integrated space and water heating Space & Water Heating 3 2 2 2 2.3

Duct Sealing Space Heating 3 2 2 2 2.3

Duct insulation Space Heating 3 2 2 2 2.3Duct insulation Space Heating 3 2 2 2 2.3

Room Heater - Vented Space Heating/Fireplace 2 3 2 2 2.2

Windows (high efficiency/Energy Star) Space Heating 2 3 3 1 2.1

Low flow showerheads Water Heating 1 3 3 2 2.1

Hot water pipe insulation Water Heating 1 3 3 2 2.1

Energy Star Dishwashers Water Heating 1 3 3 2 2.1

Window insulation kits (film) Space Heating 1 3 3 2 2.1

Education campaigns/behavioral activities All 1 3 3 2 2.1

Solar water heater Water Heating 3 1 3 1 2


Highlighted Technologies are those that “passed” the screening workshop


NCI Initial Score

Residential measures, continued

Technology End Use(s) Energy Savings

Market growth

potentialMaturity Economics Composite

Score

Flue Sealing Water Heating 2 2 2 2 2

Enzymatic detergent Water Heating 2 2 2 2 2

E St bl th t t S H ti 1 2 3 2 1 9Energy Star programmable thermostat Space Heating 1 2 3 2 1.9

Energy Star Clothes Washers Water Heating 1 2 3 2 1.9

Gas clothes dryers Clothes Drying 1 2 3 2 1.9

Drain water heat recovery Water Heating 2 1 2 2 1.8

Pool Heaters Other 2 1 2 2 1 8Pool Heaters Other 2 1 2 2 1.8

Comprehensive shell air sealing Space Heating 2 1 2 2 1.8

Furnace diagnostic testing, repair, and maintenance Space Heating 2 2 1 2 1.8

Water heater thermostat setback Water Heating 2 2 2 1 1.7

Building insulation Space Heating 2 2 2 1 1.7

Gas heat pumps (Engine, GAX) Space Heating 3 1 1 1 1.6

Hearth and fireplace products Fireplaces 1 2 2 1 1.4




Commercial measuresNCI Initial Score


Market growth


Scorep

High efficiency gas boiler (water) Space Heating 3 3 3 3 3

Condensing gas furnaces Space Heating 3 3 3 2 2.7

Integrated space heating/water heating Spaceand Water Heating 3 2 3 2 2.5

Installation of Energy Management Systems (EMS) Space Heating 3 2 3 2 2.5(EMS) p g

High efficiency gas boiler (steam) Space Heating 3 3 3 1 2.4

Tankless water heater Water Heating 3 2 2 2 2.3

Building insulation Space Heating 2 2 3 2 2.2

Ductwork retrofits/Duct insulation Space Heating 3 2 3 1 2.2Ductwork retrofits/Duct insulation Space Heating 3 2 3 1 2.2

Unit heaters Space Heating 3 1 2 2 2.1

Low flow shower and faucet aerators Water Heating 1 3 3 2 2.1

IR boilers Cooking 2 2 2 2 2

Boiler economizer Space and Process Heating 2 2 2 2 2

boiler tuneup Space and Process Heating 2 2 2 2 2

High efficiency and IR cooking appliances Cooking 2 2 2 2 2

Advanced dishwashing Water Heating 2 2 2 2 2

Food service ventilation Miscellaneous 2 2 2 2 2


Condensing gas water heater Water Heating 3 2 2 1 2

Ventilation Heat recovery systems Space Heating 3 2 2 1 2



Commercial measuresNCI Initial Score


Market growth


Score

Building commissioning All 3 2 2 1 2

Infiltration control (caulking, weather stripping, etc.) Space Heating 2 2 3 1 1.9

Low Flow spray Heads Water Heating 1 2 3 2 1.9

Engine driven heat pump Space Heating 1 2 3 2 1.9

Ventilation controls (CO monitoring, occupancy monitoring) Space Heating 1 2 3 2 1.9

Solar thermal Water Heating 2 1 3 1 1.7

Drain water heat recovery systems Water Heating 2 2 2 1 1.7

High efficiency windows Space Heating 2 2 2 1 1.7

Testing and balancing of air distribution system Space Heating 2 2 2 1 1.7

Conversion of existing constant volume air distribution systems to variable air volume systems

Space Heating 2 2 2 1 1.7

Humidification and De-humidification systems Space Heating 2 2 2 1 1.7

Advanced laundry water recycle Water Heating 2 2 2 1 1 7Advanced laundry water recycle Water Heating 2 2 2 1 1.7

Advanced Tunnel Washers Water Heating 2 2 2 1 1.7

Advanced Ozone Commercial Laundry Water Heating 2 2 2 1 1.7

Gas engine supermarket refrigeration (only if capture waste heat) Miscellaneous 2 2 2 1 1.7

S H ti P


High pressure to low pressure boilers Space Heating, Process Heating 1 2 2 1 1.4



Commercial measures, continuedNCI Initial Score


Market growth


Scorep

Pool/hot tub covers Miscellaneous 1 1 3 1 1.4

Steam trap replacement Space Heating, Process Heating 1 2 2 1 1.4

Hot water (SHW) pipe insulation Water Heating 1 2 2 1 1.4

R l t f f d i h ti t ithReplacement of forced air heating system with spot radiant heaters Space Heating 2 1 1 1 1.3

Engine driven chiller Miscellaneous 0 2 3 1 1.3

Engine driven packaged rooftop unit Miscellaneous 0 2 3 1 1.3

Absorption chiller Miscellaneous 0 2 3 1 1.3

green roof Space Heating 1 1 2 1 1.2

Steam trap monitoring Space Heating, Process Heating 1 1 3 1 1.4

Air Curtains Space Heating 1 1 1 1 1

Vent dampers Space Heating 1 1 1 1 1p p g

Air impingement, infrared, combined system Miscellaneous 1 1 1 1 1

Single pipe steam balancing Space Heating, Process Heating 1 1 1 1 1

IR heating Space Heating 1 1 1 1 1




Industrial measuresSector

Ethanol Food Fabricated Metals

Paper & Printing

Transport Service Chemicals Primary

Metals Glass Other

Sales to industry as a percent of sector 20% 14% 11% 6% 6% 5% 4% 3% 32%y p

Technology

Automatic steam trap monitoring

Condensing heat exchangers

Pinch analysis

Flue gas heat recoveryFlue gas heat recovery

Combined heat and power

Energy Audits

Boiler maintenance

Condensate return

Combustion monitoringCombustion monitoring

Blowdown steam recovery for space heat

Biomass gasification

Minimize excess air to furnace

Use pre-mix burners

Adj t bl d d i (ASD )Adjustable speed drives (ASDs) on combustion air fans/furnace draft

Recover furnace waste heat to preheat air/water

Regenerative/ recuperative burners

Improved Furnace/oven insulation and/or refractories


refractories

*Measures were ranked based on their applicability to the Minnesota industrial sector. Cost and gas savings are site specific and would not play a big role in screening technologies



Industrial measures, continuedSector

Ethanol Food Fabricated Metals

Paper & Printing

Transport Service Chemicals Primary

Metals Glass Other

Sales to industry as a percent of sector 20% 14% 11% 6% 6% 5% 4% 3% 32%y p

Technology

Reposition burners and seal to minimize in-leaking air

Vapor recompression

Multi-step evaporators

Combustion air using recirculated waste gas

Use of oxy-fuel furnaces (with heat recovery)

Organic Rankine Bottoming Cycle

Furnace radiant heat transfer device

Drain water heat recoveryDrain water heat recovery

Industrial water recycling

Pulping and drying efficiency measures

Desiccant dehumidification

Waste heat absorption chillers

W t k b d tWet cake byproduct

Glass furnace measures

Recycle in-house scrap

Product lightweighting

Preheating feedstock


Bottom stirring

*Measures were ranked based on their applicability to the Minnesota industrial sector. Cost and gas savings are site specific and would not play a big role in screening technologies


Appendix D: Measures Database

Residential measures

ID Replacement Tech Baseline TechCurrent

PenetrationMax

Penetration1

EUI (therms

/HH)Energy

Savings

Annual Gas

Savings (Therms)

Incremental Cost ($/HH)

Measure Life

(Years)

Scenario2 Calculated Incentive

1 Convection oven Standard Gas oven 3 9% 100% 56 23 0% 12 9 $380 15 $671 Convection oven Standard Gas oven 3.9% 100% 56 23.0% 12.9 $380 15 $67

2 Vented Room heaters (AFUE = 0.78) (AFUE = .64) 44% 100% 165 17.9% 29.5 $193 15 $145

3 Energy Star Programmable Thermostat Std thermostat 63% 100% 722 3.5% 25.3 $75 10 $40

4 Caulking and weather-stripping No action 5% 50% 722 10.0% 72.2 $363 15 $272

5 Home insulation Insulation-Floor R-30 R-0 60% 100% 722 14.9% 107.5 $838 30 $628

6 H i l ti I l ti C ili R 49 R 30 60% 100% 722 2 9% 21 0 $182 25 $1366 Home insulation Insulation-Ceiling R-49 R-30 60% 100% 722 2.9% 21.0 $182 25 $136

7 Condensing gas furnaces (Ave Size) 92 AFUE 80 AFUE 32% 90% 682 13.0% 89.0 $675 20 $506

8 Condensing gas furnaces (Ave Size) 94 AFUE 81 AFUE 1.8% 59% 682 14.9% 101.6 $1,359 20 $635

9 High Efficiency Boiler (Ave Size) 83 AFUE 82 AFUE 1.6% 10.0% 743 3.6% 26.9 $413 25 $200

10 Condensing gas furnaces (Ave Size) 96 AFUE 83 AFUE 0.1% 57% 682 16.7% 113.7 $1,850 20 $710

I t t d d t h ti CAE11 Integrated space and water heating CAE = 0.87 CAE = 0.70 2.0% 2% 722 13.3% 96.1 $1,570 20 $600

12 Condensing Gas Boiler (Ave Size) 91 AFUE 80 AFUE 0.10% 8.4% 743 12.1% 89.9 $1,955 25 $638

13 Window insulation film clear, single paned 5% 30% 722 4.0% 28.9 $84 1 $43

14 Furnace tune-ups No Maintenance 5% 90% 722 3.8% 27.4 $100 2 $25

15 Regular replacement of furnace filters No replacement of filters 5% 81% 722 2.0% 14.4 $40 1 $20

16 Home insulation Insulation-Wall R-19 R-11 60% 100% 722 14.1% 102.1 $6,096 25 $724

17 Faucet aerator 1.5 GPM 2.5 GPM 37% 100% 192 4.5% 8.6 $5 5 $3

18 Low flow showerheads 1.5 GPM 2.5 GPM 28% 100% 192 10.7% 20.5 $20 7 $20

19 High Efficiency gas water heater EF = 0.62 EF = 0.58 5.0% 80% 192 6.5% $70 13 $53


1: Does not include willingness factor


Residential measures

ID Replacement Tech Baseline TechCurrent

PenetrationMax

Penetration1

EUI (therms

/HH)Energy

Savings

Annual Gas

Savings (Therms)

Incremental Cost ($/HH)

Measure Life

(Years)

Scenario2 Calculated Incentive

Standard Washing $720 Use of Enzymatic detergentg

Practice 1.0% 98% 192 7.0% 13.4 $14 1 $7

21 Energy Star Dishwasher (EF=0.65) EF = 0.46 98% 100% 192 4.1% 7.9 $50 13 $37

22 Hot Water Pipe Insulation R-4 No insulation 52% 100% 192 0.7% 1.3 $8 10 $5

23 Energy Star Clothes Washer (MEF=1.8) (MEF = 1.26) 55% 100% 192 9.6% 18.4 $250 14 $91

24 High Efficiency gas water heater EF = 0.67 EF = 0.58 0.2% 80% 192 13.4% 25.7 $400 13 $120

25 Condensing gas water heater EF = .80 EF = 0.58 0.0% 80% 192 27.5% 52.7 $935 13 $247

26 Tankless water heater EF=0.82 EF = 0.575 2.6% 20% 192 16.2% 31.0 $774 13 $145

27 Solar Water heaters EF = 0.575 0.5% 100% 192 60.0% 115.0 $5,400 15 $596




Commercial measures

ID Measure Name Baseline TechCurrent

PenetrationMax

Penetration1

EUI (Therms/1000 sqft)

Percent Energy Savings

Annual Gas Savings

(Therms/1000 sqft)

Incremental Cost ($/1000

sqft)

Measure Life

(Years)

Scenario 2 Recommended

Incentive ($/1000 sqft)2

C ff28

Commercial cooking High Efficiency -Grocery Stores Standard Equipment 19% 100% 194 42.4% 82 $113 15 $56

29Commercial cooking High Efficiency -Institutional Standard Equipment 16% 100% 36 40.2% 14 $62 15 $47

30Commercial cooking High Efficiency Restaurant Standard Equipment 19% 65% 1614 32.4% 522 $2,757 12 $2,068

Commercial cooking IR package - Fast St d d E i t 1% 35% 1614 42 5% 685 $9 336 12 $4 31731Co e c a coo g pac age astFood Standard Equipment 1% 35% 1614 42.5% 685 $9,336 12 $4,317

32Commercial cooking High Efficiency Package - Fast Food Standard Equipment 9% 35% 1614 28.7% 464 $7,121 12 $2,923

33 Boiler Reset and cutout control No action 10% 28% 303 3.6% 11 $5 10 $5

34Power Vented Unit heaters

Gravity-vented standing pilot unit heater

5% 10% 303 25.0% 76 $65 20 $3234 heater

35 Boiler stack damper No damper 15% 44% 303 4.1% 12 $48 20 $30

36 Boiler economizer No Economizer 1% 33% 1133 10.0% 113 $590 20 $443

37 Incremental roof/ceiling insulation No action 5% 33% 303 10.0% 30 $330 20 $248

38 92% AFUE Modulating IR heater 82% AFUE Boiler 0% 15% 303 10.9% 33 $316 15 $237

39 Li k l S t ith O2 t l OEM li k t l 1% 27% 1133 5 0% 57 $537 20 $40339 Linkageless System with O2 control OEM linkage control 1% 27% 1133 5.0% 57 $537 20 $403

40High efficiency gas boiler Comb Eff = 0.85 Comb Eff = 0.80 15% 33% 485 5.9% 29 $280 30 $210

41 Condensing gas furnaces Residential, AFUE 0.92 Residential, AFUE 0.80 11% 21% 303 13.0% 39 $600 18 $329




ID Measure Name Baseline TechCurrent

PenetrationMax

Penetration1

EUI (Therms/1000 sqft)

Percent Energy Savings

Annual Gas Savings

(Therms/1000 sqft)


sqft)

Measure Life

(Years)

Scenario 2 Recommended

Incentive ($/1000 sqft)2

42 V il i H N H R 40% 1% 303 20 0% 61 $1 000 20 $ 41

Commercial measures, continued

42 Ventilation Heat recovery systems No Heat Recovery 40% 1% 303 20.0% 61 $1,000 20 $541

43Condensing Gas Boiler Comb Eff => 0.88 Comb Eff = 0.80 29% 11% 485 9.1% 44 $658 30 $489

44 Boiler Tuneup No action 44% 5% 485 2.0% 10 $17 2 $9

45 Energy Management Systems (EMS) Standard HVAC control 74% 1% 303 10.0% 30 $500 10 $166

46 Steam trap monitors Standard maintenance 100% 10% 276 5.0% 14 $76 15 $57p

47Integrated space heating/water heating CAE = 0.87 CAE = 0.70 100% 5% 313 13.3% 42 $703 20 $371

48Condensing gas water heater Thermal Eff = 0.92 Thermal Eff = 0.80 84% 0% 118 13.0% 15 $90 13 $68

49 Solar water heater Thermal Eff = 0.80 84% 0% 118 40.0% 47 $1,540 15 $348

50 Advanced Ozone Commercial Laundry Washer-extractor 100% 5% 229 15 5% 36 $548 15 $26350 Advanced Ozone Commercial Laundry Washer extractor 100% 5% 229 15.5% 36 $548 15 $263

51 Advanced Tunnel Washers Traditional Tunnel Washer 30% 0% 229 10.7% 25 $847 15 $182

52 HE Clothes Washer (1.42+ MEF) Standard Clothes Washer 70% 20% 229 6.1% 14 $550 8 $64

53 Laundry Wastewater recycling Washer-extractor 100% 0% 229 9.2% 21 $2,000 20 $189

54 Tankless water heater EF=0 80 EF = 0 62 20% 3% 120 13 9% 17 $777 13 $11154 Tankless water heater EF=0.80 EF = 0.62 20% 3% 120 13.9% 17 $777 13 $111

55 Faucet aerator 1.5 GPM 2.5 GPM 100% 37% 108 1.4% 2 $10 10 $8

56 low flow shower 1.5 GPM 2.5 GPM 100% 28% 108 1.4% 2 $10 10 $8

57 Drain Water Heat Recovery no action 40% 0% 108 33.0% 36 $518 30 $389

58 Improved Dishwashers Non-Energy Star Di h h 65% 64% 315 29.2% 92 $400 20 $300


58 Improved Dishwashers Dishwasher 65% 64% 315 29.2% 92 $400 20 $300



Commercial cooking measure details

Building Types Replacement Tech Baseline TechPercent Energy Savings


sqft)

Measure Life

(Years)Appliances in Package

Cooking Packages

g q ) ( )

Fast Food High Efficiency Package Standard Equipment 29% $7,121 12 HE Fryer, Char Broiler, HE Griddle, Conveyor Oven

Fast Food IR package Standard Equipment 42% $9,336 12 IR Fryer, Char Broiler, IR Griddle, Conveyor Oven

Sit Down Restaurant High Efficiency Package Standard Equipment 37% $2,757 12 Convection Oven, Fryer, Char Broiler, Salamander Broiler, Combi Oven

Institutional High Efficiency Standard Equipment 47% $62 15 Conveyor Oven, Combi Oven, Rotating Rack oven

Grocery High Efficiency Standard Equipment 32% $113 15 Rotisserie, Rotating Rack oven

Replacement Tech Baseline Tech Percent Energy Savings

Incremental Cost ($/appliance)

Measure Life (Years)

High Efficiency Combi Oven Steamer 40% $ 4,272 12

Individual Appliances

High Efficiency Convection Oven Deck Oven 61% $ 2,060 12

High Efficiency Conveyor Oven Deck Oven 50% $ 7,080 17

High Efficiency Fryer Standard Fryer 13% $ 1,520 15

IR Fryer Standard Fryer 34% $ 3,430 15

High Efficiency Griddle Standard Griddles 14% $ 3,454 13g y $ ,

IR Griddles Standard Griddles 48% $ 5,970 12

pasta cookers Range 39% $ 2,414 12

IR charbroilers Standard Charbroiler 38% $ 2,173 12

IR upright broilers Standard Radiant Boiler 37% $ 4,413 10

IR rotisserie ovens Standard Rotisserie Oven 24% $ 2,665 12


IR rotisserie ovens Standard Rotisserie Oven 24% $ 2,665 12

rotating rack ovens Deck Oven 40% $ 2,977 12

IR Salamander Broiler Standard Salamander Broiler 33% $ 1,006 12


Industrial measures

ID Measure Name Replacement Tech Baseline Tech Energy Savings

Incremental Cost ($/first year therm

saved)

Measure Life

(Years)

NCI Calculated Incentive*

59 E A dit (L S i ) E A dit N ti 7 6% 10 $59 Energy Audits (Low Scenario) Energy Audit No action 7.6% $0.70 10 $0.35

60 Energy Audits (Medium Scenario) Energy Audit No action 10.3% $0.94 10 $0.47

61 Energy Audits (High Scenario) Energy Audit No action 12.9% $1.19 10 $0.59

62 Automatic steam trap monitoring Automatic monitoring Standard maintenance 5.0% $2.23 15 $1.94

63 Condensing heat exchangers (Boilers) Condensing heat exchanger Standard heat exchanger 6.5% $2 54 25 $2.30g g ( ) g g g $2.54 $2.30

64 Condensing heat exchangers (Process heat) Condensing heat exchanger Standard heat exchanger 4.5% $2.54 25 $2.30

65 Pinch analysis Pinch Analysis No action 10.0% $1.09 25 $0.55

66 Flue gas heat recovery Flue gas heat recovery No action 2.0% $1.60 15 $0.80

67 Furnace insulation Foam insulation No action 4.9% $2.00 10 $1.00

68 Blowdown steam recovery Blowdown steam recovery for space heating

No action 1.3%$0.11

15 $0.05

69 regenerative/recuperative burners regenerative/recuperative burners Std Burners 30.0% $0.21 10 $0.08

70 Advanced Combustion Controls O2 monitoring, electronic control of Air/Fuel ratio

No action 6.5%$1.65

13 $0.82

71 Rankine bottoming cycle Rankine bottoming cycle No action 9 0% $ 13 $2 7971 Rankine bottoming cycle Rankine bottoming cycle No action 9.0% $3.29 13 $2.79

72 Combined heat and power Combined heat and power Conventional power sources 25.0% $2.93 10 $2.40

73 Biomass Gasification Biomass Gasification Conventional gas use 25.0% $3.74 15 $3.24

74 High efficiency gas boiler Comb Eff = 0.85 Comb Eff = 0.80 5.9% $3.09 15 $2.68

75 Thermal curtains Night curtain system No night curtain 23.3% $3 02 15 $2.62


$3.02

*Incentive calculated under Scenario 2

Appendix E: Economic and Technical Potentials

Economic Potential Results (Excluding Behavioral Measures)Potential Savings 2009‐2019 (Dtherms)

Utility Sector Residential Commercial Industrial

CenterPoint

< $8.56 16,135,895 7,493,936 7,727,297

< $10.99 17,400,169 10,316,225 8,246,013

< $13.42 19,477,437 12,802,656 8,764,724

Technical Potential 28,732,653 18,600,788 8,764,724

Xcel

< $8.56 3,853,335 1,975,184 4,028,262

< $10.99 4,152,403 2,612,195 4,401,332

< $13.42 4,683,861 3,218,063 4,774,399

Technical Potential 6 892 536 4 807 660 4 774 399Technical Potential 6,892,536 4,807,660 4,774,399

Integrys

< $8.56 7,781,186 5,176,303 1,157,723

< $10.99 8,369,015 6,710,034 1,270,922

< $13.42 9,335,600 8,453,389 1,384,121

T h i l P i l 13 909 355 12 410 815 1 384 121Technical Potential 13,909,355 12,410,815 1,384,121

State Total

< $8.56 27,770,416 14,645,423 12,913,281

< $10.99 29,921,587 19,638,455 13,918,268

< $13.42 33,496,898 24,474,108 14,923,244


Technical Potential 49,534,544 35,819,263 14,923,244

Appendix F: Payback Acceptance

Payback Acceptance CurvesAcceptance Rate

Payback Period (years) Residential Residential Behavioral Commercial Industrial Prescriptive Industrial Energy Audits

0 80.00% 35.00% 80.00% 80.00% 60.00%0.5 78.38% 34.29% 67.06% 75.36% 56.52%1 76.77% 33.59% 54.12% 62.72% 47.04%1.5 71.72% 31.38% 39.74% 51.20% 38.40%2 66.67% 29.17% 28.24% 46.08% 34.56%2.5 61.62% 26.96% 21.18% 26.64% 19.98%3 56.57% 24.75% 14.12% 24.72% 18.54%3.5 49.49% 21.65% 12.94% 14.40% 10.80%4 42.42% 18.56% 11.76% 13.28% 9.96%4.5 37.37% 16.35% 10.59% 6.88% 5.16%5 32.32% 14.14% 9.41% 6.32% 4.74%5.5 28.28% 12.37% 8.47% 2.32% 1.74%6 24.24% 10.61% 7.53% 2.32% 1.74%6 5 20 20% 8 84% 6 59% 1 12% 0 84%6.5 20.20% 8.84% 6.59% 1.12% 0.84%7 16.16% 7.07% 5.65% 1.12% 0.84%7.5 13.13% 5.74% 5.18% 1.09% 0.82%8 10.10% 4.42% 4.71% 1.06% 0.79%8.5 8.08% 3.54% 4.00% 1.03% 0.77%9 6.06% 2.65% 3.29% 0.99% 0.75%9 5 3 43% 1 50% 2 82% 0 96% 0 72%9.5 3.43% 1.50% 2.82% 0.96% 0.72%10 0.81% 0.35% 2.35% 1.51% 1.13%12 0.56% 0.25% 1.78% 1.12% 0.84%14 0.31% 0.14% 1.20% 0.72% 0.54%16 0.18% 0.08% 0.85% 0.00% 0.00%18 0.13% 0.06% 0.65% 0.00% 0.00%20 0.08% 0.04% 0.47% 0.00% 0.00%


0 0 08% 0 0 % 0 % 0 00% 0 00%22 0.05% 0.02% 0.28% 0.00% 0.00%24 0.01% 0.01% 0.09% 0.00% 0.00%

Source: NCI estimates based on analysis of historic energy efficiency technology adoption

Appendix G: Industrial General Measures

Savings from industrial energy audits are site‐specific. A cost curve was developed for energy audits for end‐uses and segments not targeted in the measures specific analysis.• NCI’s targeted industrial measures only apply to

large industrial customers who have the resources to analyze these technologies’ applications at their site

• Customers spending less than $250,000 on gas annual

Integrys Industrial Gas Sales by Customer Size

Percent ofCusto e s spe di g ess t a $ 50,000 o gas a uado not have these resources

• These customers can still achieve energy savings through energy audits1

• NCI gathered data from DOE’s Industrial

Percent of Gas Sales to customers

• NCI gathered data from DOE s Industrial Assessment Centers (IAC) Database, part of the “Save Energy Now” Program— Details costs and gas savings of various

recommended measures resulting from energy

Number of Customers

recommended measures resulting from energy audits

— Not all measures were necessarily implemented• Cost curve includes all industrial measures

implemented in the United States

< $250K < $500K

< $1M > $1M

S I C D


implemented in the United States Source: Integrys Customer Data

1: Energy Savings are realized through follow‐up actions in response to the energy audits. Energy savings and costs reported in this document are those of the actions recommended by energy audits. The action of performing an energy audit does not save energy.


Industrial energy audit cost curve shows a linear trend between potential savings and dollars spent for those savings

$25.00

$20.00

ved)

$15.00

ekatherm Sav

$11.87

$5.00

$10.00

Cost ($/De $9.44

$7.01

$0.00

0% 5% 10% 15% 20% 25% 30% 35%

7.6% 10.2% 12.9% Source: DOE and NCI calculations


Energy Audit Percent SavingsNote: Energy savings and costs reported in this document are those of the actions recommended by energy audits. The action of performing an energy audit does not save energy.


Energy audits and non‐conventional industrial measures have a low willingness factor• Industrial energy audit payback acceptance curve

70%

reveals that even for short paybacks, not all measures are implemented— The DOE’s data indicates whether or not

energy audits were implementedNCI i d i l i f di

Implementation Rate of Industrial Energy Audit Recommendations

40%

50%

60%

ntation Rate

— NCI examined implementation rate of audits at different payback periods to create an energy audit payback acceptance curve

— Data examined included all US measures recommended in 2006 2008

0%

10%

20%

30%

Implemenrecommended in 2006‐2008

— Data indicates that even for a very short payback period implementation rate is low (60%), this indicated a low willingness by industrial customers 0%

0 2 4 6 8 10Audit Payback (years)

i dust ia custo e s• NCI assumes a 35% willingness factor for industrial

CHP and biogas systems— Internal expertise and NCI’s experience is that

these measures have a much lower acceptanceSource: DOE and NCI calculations


these measures have a much lower acceptance rate as they are drastic process changes

Appendix H: Program Costs

Xcel Cumulative Program Costs ($Million)

Gas Price Scenario

Incentive Costs

Utility Non-incentive

Costs

Total Utility Costs

Participant Cost

Total Society Cost

Societal Benefit

2019 Cumulative Potential (Dth)Costs

Scenario 1

Low $51 $16 $67 $123 $190 $289 5,715,962

Medium $55 $18 $73 $139 $212 $320 6,273,615

High $58 $20 $77 $157 $234 $352 6,802,974

Low $240 $26 $267 $99 $366 $523 8 788 457

Scenario 2

Low $240 $26 $267 $99 $366 $523 8,788,457

Medium $277 $28 $304 $111 $415 $541 9,376,773

High $333 $30 $363 $133 $496 $580 9,909,783

Scenario 3

Low $852 $33 $885 $0 $885 $704 11,516,934

Medium $991 $34 $1 025 $0 $1 025 $765 12 307 319Scenario 3 Medium $991 $34 $1,025 $0 $1,025 $765 12,307,319

High $1,033 $35 $1,068 $0 $1,068 $790 12,646,846

Scenario 4

Low $913 $49 $962 $0 $962 $728 14,721,793

Medium $1,052 $50 $1,102 $0 $1,102 $790 15,489,221

High $1 093 $51 $1 145 $0 $1 145 $814 15 801 257High $1,093 $51 $1,145 $0 $1,145 $814 15,801,257

Scenario 5

Low $915 $49 $964 $0 $964 $732 14,790,874

Medium $1,053 $50 $1,104 $0 $1,104 $794 15,558,935

High $1,095 $51 $1,146 $0 $1,146 $818 15,871,469

N C d B fi d i d l i di f 4 75% C B fi d P i l i hi bl d i l d l


Note: Costs and Benefits are reported in present day value using a discount rate of 4.75%. Costs, Benefits, and Potentials in this table do not include low income programs or additional savings claimed by utilities by not analyzed by NCI, these effects do appear in Section 7 as a post‐processing additions. However, intermediate costs, benefits, and potentials could not calculated for these additions.


CenterPoint Cumulative Program Costs ($Million)

Gas Price Scenario

Incentive Costs


Costs

Total Utility Costs

Participant Cost

Total Society Cost

Societal Benefit


Scenario 1

Low $55 $22 $77 $144 $221 $389 8,135,762

Medium $64 $26 $90 $175 $264 $477 9,369,071

High $71 $29 $101 $206 $307 $558 10,481,735

Low $323 $40 $363 $132 $495 $822 13 486 807

Scenario 2

Low $323 $40 $363 $132 $495 $822 13,486,807

Medium $353 $42 $395 $156 $551 $853 14,327,149

High $451 $47 $497 $208 $706 $947 15,631,340

Scenario 3

Low $1,059 $52 $1,111 $0 $1,111 $1,117 18,532,518

Medium $1 103 $53 $1 155 $0 $1 155 $1 142 18 844 819Scenario 3 Medium $1,103 $53 $1,155 $0 $1,155 $1,142 18,844,819

High $1,280 $56 $1,336 $0 $1,336 $1,267 20,461,565

Scenario 4

Low $1,171 $77 $1,248 $0 $1,248 $1,163 24,337,086

Medium $1,215 $77 $1,292 $0 $1,292 $1,187 24,605,617

High $1 391 $80 $1 472 $0 $1 472 $1 312 26 179 778High $1,391 $80 $1,472 $0 $1,472 $1,312 26,179,778

Scenario 5

Low $1,192 $78 $1,271 $0 $1,271 $1,212 25,197,226

Medium $1,237 $79 $1,316 $0 $1,316 $1,240 24,890,702

High $1,414 $82 $1,496 $0 $1,496 $1,367 26,503,769





Integrys Cumulative Program Costs ($Million)

Gas Price Scenario

Incentive Costs


Costs

Total Utility Costs

Participant Cost

Total Society Cost

Societal Benefit


Scenario 1

Low $20 $5 $25 $36 $62 $129 2,242,726

Medium $24 $7 $31 $46 $77 $166 2,772,845

High $27 $8 $35 $56 $91 $198 3,239,416

Low $85 $9 $95 $38 $133 $260 3 839 132

Scenario 2

Low $85 $9 $95 $38 $133 $260 3,839,132

Medium $94 $10 $104 $47 $151 $275 4,191,861

High $115 $11 $126 $60 $185 $302 4,580,531

Scenario 3

Low $284 $12 $295 $0 $296 $340 5,226,352

Medium $315 $12 $327 $0 $327 $370 5 636 203Scenario 3 Medium $315 $12 $327 $0 $327 $370 5,636,203

High $318 $12 $331 $0 $331 $381 5,818,926

Scenario 4

Low $312 $17 $329 $0 $329 $352 6,735,523

Medium $343 $17 $361 $0 $361 $382 7,131,899

High $347 $18 $365 $0 $365 $392 7 304 451High $347 $18 $365 $0 $365 $392 7,304,451

Scenario 5

Low $319 $17 $337 $0 $337 $368 7,025,016

Medium $350 $18 $368 $0 $368 $398 8,483,878

High $354 $18 $372 $0 $372 $410 8,665,131




Appendix I: Program Design Best Practices ‐ Residential

Home Performance with EnergyStar is a leading example of program bundles’ success in simplifying outreach and increasing participation.• Existing home renovation program

— Over two‐thirds of existing homes are over 25 years old, representing a significant potential to upgrade to modern energy efficiency standards

• Whole‐house inspection by a participating contractorParticipating certified contractors examine the house (audit) conducting— Participating certified contractors examine the house (audit), conducting comprehensive assessments using diagnostic equipment

— Offers recommendations to address high energy bills through sealing air leaks, increasing insulation, improving space conditioning efficiencyHi h l l f i h h i h f— High level of trust with homeowners since contractors return to test home after the project is completed to document the improvement of the home’s performance

• The US EPA and the DOE estimate the potential per home energy savings for typical Midwest home to be approximately 400 therms/year

• Currently offered in 23 states, with NYSERDA, Wisconsin’s Focus on Energy and Energy Trust of Oregon leading the way

S H P f ith ENERGY STAR A l ti E Effi i


Source: Home Performance with ENERGY STAR: Accelerating Energy Efficiency Improvements in Existing Homes, 2008. Patricia Plympton and Sarah Boman, NCI; Terry Logee, Lani MacRae & Edward Pollock, U.S. DOE; Paul Norton, National Renewable Energy Laboratory; Julie Hawkins, D & R, International.


Best practices and discussion with trade allies has identified key approaches to deal with common barriers to the HPwES.

Contractor Participation

C Fi i

•Potential reimbursement for diagnostic material•Financial incentives and/or awards for contractors achieving milestones•Contractor mentoring, certification and sales training

•Average cost of projects ranged from $5,600 ‐$8,500•Partner with financial institutions to offer low interest loans and financingConsumer Financing

Program Marketing

g•High rebate incentives, additional rebates for multiple measures•Tax credits

•Websites, bill inserts, events, contests, customer testimonials•Contractor promotion through coop advertisements•Tie in with US EPA campaigns

Emphasize “Non‐Energy” Benefits

•Tie in with US EPA campaigns•Energy Savings Certificates – “green” branding

• Energy efficiency is not the only motivator for consumers, primary driver has been health, safety and comfort – marketing shouldalso emphasize these benefitsp

Quality Assurance•Essential to maintain good reputation•Reassurance that contractors will be accountable for their work•Benefits to contractors be contingent on proper contractor reporting



Vermont Gas’ HomeBase Retrofit Program provides a comprehensive, turn‐key service offering a “house‐as‐a‐system” approach.

• Priority to high annual gas usage (>1400 Ccf/year)Priority to high annual gas usage (>1400 Ccf/year)• Free home energy audits

— Provides written report summarizing results — Details on available incentives— Provides a list of potential contractors

“Fast‐Track” option – list of pre‐screened contractors and prices— Provides all specifications if owners chooses to seek competitive bidsR b t t li it d t ifi t f d fi i t• Rebates not limited to specific types of measures and financing not capped for any individual customers

• Incentives based on home ownership type— 33% of installed cost for homeowners; 50% to building owner if tenants pay utilities; g p y— Reduced interest financing available for incremental cost.

• Technical and project management services available to encourage installation of recommended measures


Source: ACEEE Compendium of Champions, Residential Retrofit Programs, 2008

Appendix I: Program Design Best Practices ‐Multifamily

The NYSERDA Multifamily Performance Program is a single entry point energy efficiency program for all multifamily customers. • The program consists of multiple sub‐programs, each with their own incentives

— Retrofits and new construction; low‐income and market rate• Building owner selects a pre‐authorized and certified “partner” to facilitate the participation and

assistance throughout the program• For existing buildings, emphasis on benchmarking, energy reduction plan, and g g p g gy p

modeling/verificationProgram‐wide benchmarking tool compares their building performance against peersNot a widget program: method of achieving targets is not prescribedPartners ensure all potential incentives are being utilized

• For new construction, buildings receive Energy Star rating (20% less energy than code building)— Must meet set of minimum performance standards for insulation, windows, heating and cooling

systems, appliances, etc.— Uses modeling software to demonstrate savings (work with developers and design team to

incorporate savings into proposed building design)— Incentive are paid out in stages

Front‐loaded incentives improve cash flowStages ensure implementation


• Similar model being used in Wisconsin and OregonSources: NYSERDA (http://www.getenergysmart.org/MultiFamilyHomes/Default.aspx) and NYSERDA’s Multifamily Performance Program: Rounding the First Turn, 2008. Mark Lorentzen and Tom Rooney, TRC Energy Services; Michael Colgrove and Patrick Fitzgerald, New York State Energy Research and Development Authority.

Appendix I: Program Design Best Practices ‐ Commercial

Minnesota schools have the potential for increased energy savings through adoption best practices for both state and national programs.• According to Minnesota’s “B3” building energy benchmark program, schools have a

b h k EUI f 107 kB / f ( ll f l )1benchmark EUI of 107 kBtu/sq ft (all fuels)1— Average potential energy saving opportunity of 37 kBtu/sq ft (35%)

• Operating capital is $173‐$223 per pupil in 2007‐08, totaling $194.1 million statewide2— Additional financing available for deferred maintenance through the Alternative g g

Facilities Bonding and Levy Program3

— Other energy efficiency financing available through non‐State loans/grants4

• Extensive literature and best practices guidelines published for Minnesota schools— Healthy Sustainable Schools Guide for Change, 20075Healthy Sustainable Schools Guide for Change, 2007— Guide for Planning School Construction Projects in Minnesota, 20036— Sustainable Schools Minnesota, 20017

• Many potential programs to partner with, including CHPS, EnergySmart Schools (US DOE) EnergyStar labeled schools (US EPA) Energy Performance Benchmarking ToolDOE), EnergyStar labeled schools (US EPA), Energy Performance Benchmarking Tool (US EPA), Energy Saving in School Buildings (Nat. Clearinghouse for Edu. Facilities) and Green Schools Program (Alliance to Save Energy)

1. Minnesota B3 Benchmarking Results: Prioritizing the Energy Savings Opportunity in Minnesota Public Buildings, MN Dept of Commerce and The Weidt Group, ACEEE Summer Study on Energy Efficiency in Buildings, 2008.2. Financing Education in Minnesota 2007‐08, Minnesota House of Representatives Fiscal Analysis Department, www.house.leg.state.mn.us/fiscal/files/07fined.pdf


g , f p y p , g f f f p f3. For example, if equipment has an expected life of 15 years but is 20 years old. http://education.state.mn.us/mdeprod/groups/Finance/documents/Manual/004004.pdf4. Some examples can be found at http://www.greeningschools.org/resources/funding_opportunities.cfm5. Published by the Minnesota Pollution Control Agency, http://archive.leg.state.mn.us/docs/2008/other/080616.pdf6. Published by the Minnesota Department of Children, Families & Learning, http://education.state.mn.us/mdeprod/groups/Finance/documents/Publication/003979.pdf7. Published by LHB Engineers and Architects, the Minnesota Pollution Control Agency, & others. http://www.pca.state.mn.us/oea/publications/highperformanceschools.pdf


Collaborative for High Performance Schools (CHPS) is an example of a successful program redesign based upon market segment specific needs.• The first CHPS school was completed in California in 2001 Since then the program• The first CHPS school was completed in California in 2001. Since then, the program

has expanded to include 8 states, and 121 CHPS schools are complete or in progress— Includes new buildings, new schools, and modernization (retrofits)

• Two tiered program, Designed & Verified, accommodates budget & time constraintsp g g g— Schools can choose the level of rigor that meets their needs

• Leverage schools’ strong emphasis on health & safety and quality of life• Six‐volume best practices manual available free online

— Covers lifecycle from design to occupancy• Program bundles all sustainability considerations

— SitingW t

CHPS Designed/Verified Schools

506070

eted or In

s— Water— Energy— Materials— Indoor Environmental Quality

010203040

2001 2003 2005 2007 2009+Projects Com

ple

Progress


Q y— Policy & Operations

Source: Collaborative for High Performance Schools, http://www.chps.net/

2001 2003 2005 2007 2009+

Projects listed as in progress and without a completion date were placed in the 2009+ category. Projects listed as complete but without a completion date were assumed to have been completed 1 year after the CHPS Edition used.


Schools for Energy Efficiency (SEE) program is helping schools achieve significant savings through low‐cost measures. • Currently in over 500 schools districts across USA (Iowa, New Jersey, Louisiana)

— Serving 20 school districts in Minnesota or over 400 schools• Emphasis on efficient operations and behavioral energy efficient strategies

— Operations: focus on training building operators and decision‐makers who run the buildings (Principals, community users)g ( p y )

— Awareness and Behavior Changes of student and staff: Poster campaigns, tip sheets, activities rather than curriculum (game shows, energy bikes, etc. ), energy kits

• Integrys is currently piloting the program — Working with utility on tracking assets and program development for 5+ years,Working with utility on tracking assets and program development for 5 years,

recommendations on efficient energy use, available rebates, etc.• Online software tracks energy savings using billing information and weather regression• Ownership over program since school district funds program

C t f $5 000 b ildi ( 1) $4 000 i 2 $3 500 i 5— Cost of $5,000 per building (year 1), $4,000 in year 2… $3,500 in year 5— SEE provides support, program materials and strategies for 5 year program (yearly

theme)• Average first years savings is $10,000 ‐$12,000 in savings ‐ between 10‐15% savings for a

di t i t afte 5 yea


district after 5 years. Source: Communication with Doug Karnuth, www.seeprograms.com/overview.htm

Appendix I: Program Design Best Practices – Commercial

Success in program redesign based on market segmentation ‐Hospitality Industry (Wisconsin).• Considered market‐based characteristics, interdisciplinary team created tools p y

and promoted technologies specifically targeted for hospitality sector— Guestroom Energy Management Systems, Showerheads/Aerators and Pre‐

Rinse Spray Valves, Variable ventilation control, etc.• Developed national partnerships (Energy Star, CEE, etc.) and aligned with

groups that interact with target markets• Since inception in 2004, following increase:

d— Lodging properties: 43 to 348— 55% increase in average natural gas

savings per customer

S A M k t B d A h t E Effi i i


Source: A Market‐Based Approach to Energy Efficiency in Hospitality, 2008, Mindy Guilfoyle and Matthew Matenaer, Focus on Energy/ Franklin Energy

Appendix I: Program Design Best Practices ‐ Industrial

Partnerships with US DOE’s Save Energy Now will increase utilities presence in industry, promote market transformation, and allow for greater uptake of rebates.

• US DOE’s Save Energy Now national initiative of the Industrial Technologies Program (ITP) to drive a 25% reduction in industrial energy intensity in 10 years.

• Industrial companies can participate in no‐cost energy assessments and utilize ITP p p p gyresources to reduce energy use while increasing profits.— DOE Energy Experts conduct energy assessments to help manufacturing facilities

identify immediate opportunities to save energy and money. — Experts train plant personnel to apply DOE software analysis tools to identifyExperts train plant personnel to apply DOE software analysis tools to identify

additional opportunities— An assessment can also be part of an overall energy management strategy

• Utilities can partner with ITP to leverage Save Energy Now resources and help i b t th i ffi icompanies boost their energy efficiency.

S S E N


Source: Save Energy Now ‐http://www1.eere.energy.gov/industry/saveenergynow/assessments.html

Appendix I: Program Design Best Practices – Joint Programs

Utilities in Connecticut linked their delivery mechanisms into one Home Energy Solutions Program for “One‐stop‐shopping”.• Collaboration between Connecticut Light & Power; United Illuminating Company and

Connecticut Energy Efficiency Fund.• Utilities combined multiple electric and NG programs into a single delivery mechanism• “One‐stop‐shopping” for addressing both natural gas and electricity saving programs

I d f i i i l i l li i d— Increased ease of participation ‐ customers complete a single application and services provided via single crew

— Resulted in cost reductions for utilities (administration and implementation)• Increased savings per households by addressing both electric and natural gas I ea e a i g pe ou e o y a e i g o e e i a a u a ga

applications and achieving synergies between end‐uses (e.g., weatherization)• Development of comprehensive database which tracks energy saving and simplifies

determination of program results


Source: ACEEE Compendium of Champions, Residential Retrofit Programs, 2008

Appendix I: Program Design: Best Practices – Joint Programs

The strong success of Gas Networks® exemplifies the benefit of collaboration and partnerships with key players.• Collaborative effort between 8 local gas companies throughout New Englandg p g g• Provides market transformation and rebate programs which are consistent

across the region• Reduces customer and contractor confusion• Rebates include residential and small C&I heating and water heating

programs, Energy Star Homes program, C&I infrared heating program and food service program

• Partnership with the Commonwealth of Massachusettsʹs electric companies to offer joint rebate on high efficiency furnaces with ECM

• Robust contractor education and training seminarsRecommendation

Minnesota Gas Utilities consider collaborative efforts in areas of mutual benefit, maintaining individual branding and identity within


f g g yeach of their utility service territories

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