Energy Efficiency Program Overview

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1 Energy Efficiency Program Overview Clean Air Through Energy Efficiency CATEE Conference November 18-20, 2014 Dallas, TX

2 General Overview State of Texas enacted legislation requiring Transmission and Distribution utilities (TDUs) achieve annual goals for energy efficiency Public Utility Commission of Texas (PUCT) implemented rules and guidelines for consistency among the TDU programs Texas TDUs established energy efficiency programs to meet legislative requirements All Texas TDUs must offset 30% of their annual growth in demand or 0.4% of peak demand through energy efficiency. Energy savings goals are calculated using a 20% conservation load factor All Texas TDUs are required to make energy efficiency programs available to customers in all eligible customer classes in order to reduce energy consumption and costs TDUs must offer programs through third-party implementers or energy efficiency service providers (EESPs) Programs are administered by TDUs

3 Types of Programs Standard Offer Programs (SOPs) Primary objectives of SOPs are to achieve cost-effective reduction in summer & winter peak demand TDU s enter into contracts with EESPs for the installation of qualifying energy efficiency measures that result in a reduction of peak demand (kw) and energy savings (kwh) Incentive payments to EESPs are based solely on the kw and kwh savings yielded through the installation of qualifying energy efficiency measures. Depending on the SOP, measures may be installed at new or existing facilities EESPs may use the incentive payment to offset the cost of a measure to end-use customer Residential incentives are paid directly to the EESP Simple streamlined process designed to encourage strong participation from EESPs Market Transformation Programs (MTPs) MTPs are strategic programs intended to induce lasting change in market behavior by removing identified barriers to accelerate the adoption of energy-efficient technologies Previously identified barriers include lack of education, funds, training, assistance and information to customers Incentives are paid to implementers for providing energy efficiency education, information, assistance, training, and guidance to customers Incentives are paid for kw and kwh savings yielded from projects Depending on the MRP, measures may be installed at new or existing facilities

4 Who is AEP Texas? AEP Texas is an energy delivery company serving south and west Texas AEP Texas Central Company (TCC) delivers electricity to end-use customers on behalf of the Retail Electric Providers (REPs) in south Texas AEP Texas North Company (TNC) delivers electricity to end-use customers on behalf of the REPs in west Texas > 970,000 customers > 42,000 miles of overhead distribution lines > 97,000 square miles service area

5 AEP Texas Program Portfolio Residential Programs A/C Distributor Pilot MTP CoolSaver A/C Tune-Up MTP* Hard-to-Reach SOP High Performance New Homes MTP* Residential SOP SMARTSource SM Solar PV MTP Targeted Low-Income Weatherization Non-Residential Programs Commercial SOP Commercial Solutions MTP CoolSaver A/C Tune-Up MTP* Irrigation Load Management MTP Load Management SOP Open MTP SCORE/CitySmart MTP SMARTSource SM Solar PV MTP * AEP TCC only

6 Residential Programs A/C Distributor MTP: Provides incentives to A/C distributors who promote and facilitate the installation of high efficiency air conditioners CoolSaver A/C Tune-Up MTP: Participating EESPs receive incentives for the successful implementation of air conditioning tune-up and air flow correction services Hard-to-Reach SOP: Provides incentives to participating EESPs for the installation of energy efficiency measures in low-income residences High Performance New Homes MTP: Home-builders receive incentives to build above-code, energy efficient homes Residential SOP: Provides incentives to participating EESPs for the installation of energy efficiency measures in residences SMARTSource SM Solar PV MTP: Provides cash incentives for grid-tied solar PV installations to help offset the cost of installing solar energy systems Targeted Low-Income Program: Designed to cost effectively reduce energy costs and energy consumption for low-income customers

7 Non-Residential Programs Commercial SOP: EESPs receive incentives for installing measures that reduce peak demand and save energy in commercial facilities Commercial Solutions MTP: Program is designed to help commercial customers address rising energy costs through energy efficiency CoolSaver A/C Tune-Up MTP: Participating EESPs receive incentives for the successful implementation of air conditioning tune-up and air flow correction services Irrigation Load Management MTP: Program targets commercial, agricultural customers. Participants receive incentive payments for load interruptions during summer peak period Load Management SOP: EESPs receive incentives for load interruptions during the summer peak period Open MTP: EESPs perform an energy assessment and receive incentives for the installation of energy efficient measures in commercial facilities with 100 kw SCORE/CitySmart MTP: Program is designed to help educational and governmental entities address rising energy costs through energy efficiency SMARTSource SM Solar PV MTP: Provides cash incentives for grid-tied solar PV installations to help offset the cost of installing solar energy systems

8 Am I Eligible to Participate? Any entity meeting the SOPs application requirements that installs eligible energy efficiency measures at a customer site with electricity distribution service from AEP TCC or AEP TNC is eligible to apply for participation in the programs Eligible EESPs may include: Energy service companies Retail electric providers National or local companies that provide energy-related products (e.g., insulation or HVAC) Product retailers, if they install the particular energy-efficient products Commercial customers with peak load 50 kw that install measures in their own facilities

9 How Do I Participate? Devise a business plan of involvement in energy efficiency programs Review each program manual in its entirety Review each program agreement Complete and submit on-line registration & application Comply with requirements of each program type Upon acceptance, initiate business plan Perform reporting for incentive payment Applications will be reviewed upon receipt of all required application documents Contracts will be awarded based on EESP qualifications, performance history, etc., to ensure program goals will be achieved with quality installations and timely reporting

10 2013 Program Accomplishments Utility Demand and Energy Goals* Reported and Verified Savings** MW MWh MW MWh AEP TCC*** , ,954 AEP TNC , ,087 Total , ,041 *AEP TCC and AEP TNC achieved 239% of their 2013 demand reduction goal of MW by achieving MW of demand reduction ** AEP TCC and AEP TNC achieved 192% of their 2013 energy reduction goal of 30,117 MWh by achieving 58,041 MWh of energy reduction *** AEP TCC received the 2014 ENERGY STAR Partner of the Year Sustained Excellence award for continued leadership in protecting the environment through its High Performance New Homes MTP

11 Challenges Ahead Meeting increasing demand and energy reduction goals will prove to be challenging due to TDU administrative cost caps, rate cost caps by customer class, and annual changes in avoided costs of energy and capacity Cost-effectiveness standard is at the program level. Benefit/Cost 1 indicates cost-effective program. Program costs include incentives, EM&V costs, performance bonus (awarded share of net benefits), administrative and R&D costs Changing baselines within residential and non-residential customer classes: Increased efficiencies in baselines for residential heat pumps and split system A/C will result in savings drop Savings reductions from replace-on-burnout (ROB) in retail residential appliances (room A/C, refrigerators) and HVAC systems Commercial lighting applications: continued drop in lighting retrofit savings as T-12 baseline phases out. Higher efficiencies realized with T-8 baseline

12 For More Information AEP Texas website for energy efficiency information: Statewide energy efficiency program website:

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