Computer Efficiency Product New Product

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1 Computer Efficiency Product New Product Public Service proposes to offer a new product in 2011 called Computer Efficiency. The Computer Efficiency Product offers two components: 1. Upstream incentives to manufacturers; and with rebates directly to end-use business customers. This new product is being proposed in Colorado based on recent advances in highefficiency computing and experience in our Minnesota service territory. We believe that this product is applicable to every size business customer in Public Service Company s electric service territory. The product is projected to bring in an average of 5-6 GWh of energy savings per year over the next three years, which would place it in the middle of the pack (7 th out of 15) of the other DSM business products in Public Service s portfolio. Unlike other efficiency products, personal computers are replaced on average every four to five years. Because of this refresh rate, the computer efficiency program has the opportunity to capture ongoing participation from businesses as they refresh their personal computers. 1

2 Computer Efficiency Product A. Description Public Service proposes to offer a new product in 2011 called Computer Efficiency. The Computer Efficiency product offers two components: 1. Upstream incentives to manufacturers; and 2. Desktop PC virtualization providing rebates directly to end-use business customers in Public Service s electric service territory. The upstream manufacturer incentive component provides incentives to desktop personal computer (PC) manufacturers that design, install and deliver units with energy efficient power supplies to business customers in Xcel Energy s Colorado electric service territory. This component is administered through a third party, Ecos Plug Load Solutions (PLS), that developed and promotes their 80 Plus program on behalf of utilities across North America. When units are shipped to qualified zip codes (as confirmed by the manufacturer), PLS pays the manufacturer incentives and provides a report and invoice to Xcel Energy for reimbursement. Manufacturers who sign a participation agreement and turn in a claim form to PLS can receive incentives. The incentives and savings are prescriptive in nature. Incentive amounts are based on 56% of the incremental cost to the manufacturers. The budget was developed by estimating the number of participants and multiplying by total cost per participant. The manufactures use this incentive to promote their efficient computers and to increase their number of products offered with high efficient power supplies. This end-use customer component provides rebates to business customers who implement a Virtual Desktop Infrastructure (VDI) strategy. This strategy involves installing a VDI device instead of the traditional desktop PC. The VDI device has a lower operating wattage and uses less energy than traditional desktop computers. The VDI device communicates with a server to enable access to software applications and for the user to store data on the server rather than on their local hard drive. This component is administered by Public Service and follows the methodology of Public Service s other prescriptive measures. Customers can apply for a prescriptive rebate of $60 per VDI installed. Rebate amounts are based on 52% of the incremental cost to the customer for the change-over to the VDI system. The budget was developed by estimating the number of participants and multiplying by total cost per participant. 2

3 B. Goals, Participants & Budget Goals and Participants: Demand kw and energy kwh impact goals were determined from equipment wattages levels determined by Public Service based on information from PLS and ENERGY STAR. Participant levels for the upstream manufacturer incentives were determined by PLS based on their program experience in our Minnesota service territory. The baseline technology is a computer meeting ENERGY STAR 3.0 specifications. The energy-efficient technology is a computer meeting 80 Plus Bronze, Silver, Gold or Platinum criteria. Currently only computers meeting ENERGY STAR 5.0 meet these requirements. The overall net-to-gross (NTG) ratio is set at 0.88 based on the estimated market penetration of Bronze, Silver, Gold, and Platinum 80 Plus power supplies in Colorado as determined by PLS. Other utilities around the country are using an NTG of 1.0 for their corresponding programs. As with the Upstream Manufacturer Incentive, the baseline technology for Desktop PC Virtualization is a desktop computer meeting ENERGY STAR 3.0 specifications. The net-to-gross ratio is set at 0.92 based on applying a market penetration percentage of efficient computers to the wattage and kilowatt-hour savings amount at five baseline levels. The assumption is, if our program was not in place, some of the customers that bought VDI boxes would have bought desktop computers at ENERGY STAR 4.0 or higher; not all would have bought ENERGY STAR 3.0. The number of participants per year for Desktop PC Virtualization was estimated by Public Service s customer base and market potential based on vendor comments on market size and the program s expected launch date. Budget: For the Computer Efficiency product, rebates, program administration, labor and promotions drive most of the budget. This total budget of $283,574 for 2011 will be handled within the 15% flexibility allowance of the total portfolio 2011 electric budget. Planning & Design: Program Administration and Delivery: PLS charges an administrative fee per each unit shipped (manufacturer incentive measure only). Internal administrative labor charges were determined by estimating the number of full-time employees needed to manage the product and execute the marketing strategy and incentive process. Manufacturer incentives that are retained by the manufacturer for promotion and product development are budgeted in this category. Advertising, Promotions and Consumer Education: The estimated promotional budget anticipates costs for contribution to the general conservation advertising campaign. 3

4 Participant Rebates: The estimated participant rebates accounts for cost offsets to the incremental capital costs included in the technical assumptions. These rebates may take the form of a direct rebate to program participants, or a reduction in the ultimate cost the program participant s pay for the equipment. Measurement & Verification: The estimated M&V budget anticipates costs for both third-party customer on-site visits as well as third-party customer follow up communications detailed in Section G Electric Goal 2011 Gas Goal Computer Efficiency product Budget Planning & Design $1,125 - Admin & Program Delivery $223,088 - Ad, Promo, & Customer Ed. $13,236 - Participant Rebates & $30,000 - Incentives Equipment & Installation - - M&V $16,000 - Miscellaneous - - Total $283,574 - Net Generator kw Net Generator kwh 4,778,754 - Annual Dth - - Annual Dth/$M - - Participants 17,255 - Participation as % of Segment Modified TRC Test Ratio C. Application Process Manufacturers learn of the upstream incentives and the benefits through marketing by PLS. Interested manufacturers can sign up to participate in the 80 PLUS program by contacting PLS directly. End-use customers will learn about the prescriptive rebates through marketing by Public Service. Customers will apply for rebates through an application process. D. Marketing Objectives, Goals, & Strategy The primary marketing efforts for the manufacturer incentive will revolve around PLS connecting 80 Plus approved suppliers with computer manufacturers and utilities to continue increasing program participation. PLS will ensure that only 80 Plus qualified products are promoted in the program. Xcel Energy marketing channels include internal 4

5 and external newsletters, Business Solution Center representatives, and our website. Program challenges include customer awareness, incremental manufacturer costs, first cost to customers and transforming manufacturer mind-set. E. Product-Specific Policies For the upstream manufacturer incentive, manufacturers must submit a rebate claim form to PLS within 12 months of unit delivery to receive a rebate. For the end-use customer rebates, all equipment rebated through the measure must be new and meet all measure rules and requirements and the application must be submitted within twelve months of the invoice date. F. Stakeholder Involvement Public Service consulted with equipment vendors for guidance when designing the Computer Efficiency product for Colorado. These vendors provided insight into the types of products to rebate and the incremental and total equipment costs to be expected. Public Service will also rely on the trade to help promote the product to customers. G. Rebate Levels It is unclear how much of the incentive paid to manufacturers is passed on to program participants in the form of reduced purchase cost. Because of this it was assumed that the incentives paid to manufacturers should not be included as a rebate. If there is evidence found that the incentive paid to manufacturers results in purchase costs lower than the incremental cost assumed in the technical assumptions, this reduction will be accounted as a rebate. The incentive structure is listed below: $5 incentive for ENERGY STAR 5.0 / 80 Plus Bronze desktop power supplies $10 incentive for ENERGY STAR 5.0 / 80 Plus Silver desktop power supplies $15 incentive for ENERGY STAR 5.0 / 80 Plus Gold desktop power supplies $20 incentive for ENERGY STAR 5.0 / 80 Plus Platinum desktop power supplies The proposed rebate levels average 56% of the incremental cost to the computer manufactures. This level balances the cost-effectiveness of the product with the influential value to the manufacturer and a payback less than 3 years. Business customers rebates are paid at $60 per thin-client or zero-client device installed in lieu of a desktop PC. 5

6 The proposed rebate is 52% of the average incremental cost. This level provides a payback to the customer less than 3 years. H. Evaluation, Measurement & Verification The Upstream Manufacturer Incentive will be managed by a third-party provider, PLS, who is required to provide monthly reports and invoice numbers showing how many computers were shipped in Pubic Service electric territory by each participating manufacturer before any payment is made. PLS will provide Public Service, along with the invoice number and rebate claim request, a summary listing of units shipped by manufacturer indicating: Customer zip code Computer manufacturer Computer model numbers Incentive level Ship date Quantity shipped PLS will facilitate testing to confirm that products meet the program standard and can be promoted under the program. Ecos Plug Load Solutions (PLS) maintains the services of a nationally recognized testing organization, EPRI Solutions, to deliver independent, qualified product testing and results. The M&V process will begin with verification of the entire population of the manufacturers customers by Public Service to determine that 100% of the zip codes of the manufacture s shipments are all within Public Service territory. The complete list of projects will be sent to a third-party M&V provider. This provider will select a statistically significant random sample of approximately 40 projects to audit. The third - party provider will send a request to Public Service & PLS to provide invoices and customer contact information. For these random projects PLS will provide both Public Service and the third-party M&V provider invoices and customer contact information. The M&V provider will contact the customer to verify and develop realization rates with an objective of at least +/-10% accuracy of the realization rate within a 90% confidence interval based on verification that: The number of computers on the invoice matches the number of computers received by customer. The model numbers of computers shipped match the invoice; to verify accurate rebate level: bronze, silver, gold or platinum. The number and model number of units that were returned (if any) are noted. 6

7 The M&V provider will compute the savings for each of the sample sites based on the deemed savings calculator and provide the realization rate of the ex-post savings compared to the ex-ante savings for each site. At the end of the year, the M&V provider will compute the annual realization rate to be applied to the gross claimed savings. Desktop PC Virtualization will follow the General Prescriptive Project Process. General Prescriptive Project Process: 1. Customer submits rebate application and required documentation to Public Service after measure is installed. 2. Rebate Operations reviews all business product rebate applications and vendor invoices. They check the customer information, equipment eligibility and proper rebate amounts. If information is missing or incorrect, the application is sent back to the account representative or customer to make changes. 3. If project qualifies for rebate, Rebate Operations enters rebate application form data into Siebel (rebate tracking database) and authorizes rebate payment. Prior to authorizing rebates, all applications are verified in a daily audit. 4. Public Service sends the Verification Contractor (VC) a list of all of the projects completed in that period on an agreed to schedule. 5. The VC selects a statistically valid sample of projects to inspect. The sample size is designed to achieve 90% confidence with 10-20% precision. 6. VC contacts customer to schedule the inspection or complete the phone survey. 7. VC visits site and verifies the savings factors or checkpoints for that measure. 8. VC inputs the verified savings factors into the calculator spreadsheets to calculate the project s verified energy savings. 9. VC calculates the project s realization rate, which is calculated by dividing the recalculated or verified savings are divided by the reported or rebated savings. At 1.0 or 100%, the verified and rebated savings are equal. 10. VC calculates the product s realization rate, which is the average realization rate of all projects in the product sample. 11. The product s realization rate is applied to the rebate application savings captured in Siebel to determine gross verified savings. 12. Net-to-gross factors will be applied to the gross verified savings by efficiency level to determine net savings. Refer to the Electric and Natural Gas 2011 DSM Plan for further information on how Public Service addresses evaluation, measurement & verification for its DSM program. 7

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