Home Performance with ENERGY STAR

Transcription

1 2012 Home Performance with ENERGY STAR Evaluation of Austin Energy s Home Performance with ENERGY STAR (HPwES) Program September 2012 Prepared by:

2 Table of Contents TABLE OF CONTENTS I 1 EXECUTIVE SUMMARY FINDINGS IMPACT EVALUATION PROCESS EVALUATION RECOMMENDATIONS IMPACT EVALUATION PROCESS EVALUATION 5 2 PROGRAM OVERVIEW GOALS AND OBJECTIVE REBATE PROGRAM MEASURES PROGRAM STATISTICS AND MEASURES IMPLEMENTED 9 3 EVALUATION OVERVIEW IMPACT EVALUATION OVERVIEW ENERGY SAVINGS MODEL COST EFFECTIVENESS MODELS BILLING ANALYSIS PROCESS EVALUATION OVERVIEW REVIEW OF PROGRAM MATERIALS PROGRAM STAFF INTERVIEWS REVIEW OF RELEVANT PROGRAMS AND BEST PRACTICES 21 4 IMPACT EVALUATION ENERGY EFFICIENCY IMPROVEMENTS INFILTRATION REDUCTION ADDITIONAL ATTIC INSULATION COOLING SYSTEM IMPROVEMENTS CENTRAL AC (NATURAL GAS HOMES) 23 i GDS Associates, Inc.

3 4.1.4 HVAC IMPROVEMENTS ASHP (ELECTRIC HOMES) DOMESTIC HOT WATER IMPROVEMENT LIGHTING AND APPLIANCE REPLACEMENTS LOW FLOW DEVICES PROGRAMMABLE THERMOSTATS DISTRIBUTION SYSTEM IMPROVEMENT WINDOW IMPROVEMENTS INDIVIDUAL MEASURE SAVINGS MEASURE PACKAGE SAVINGS COST EFFECTIVE ENERGY EFFICIENCY IMPROVEMENTS BILLING ANALYSIS RESULTS PRIORITIZATION STRATEGIES 52 5 PROCESS EVALUATION GOALS AND OBJECTIVES FINDINGS RECOMMENDATIONS OPERATION AND DELIVERY OVERVIEW OF PROGRAM OPERATION HOME PERFORMANCE PROTOCOLS CONTRACTOR NETWORK QUALITY ASSURANCE RECOMMENDATIONS COORDINATION AND COMMUNICATION FINDINGS RECOMMENDATIONS MARKETING AND CUSTOMER EDUCATION FINDINGS RECOMMENDATIONS PARTICIPATION AND BARRIERS TO PARTICIPATION FINDINGS RECOMMENDATIONS CUSTOMER DECISION MAKING AND PROGRAM INFLUENCE FINDINGS RECOMMENDATIONS INCENTIVE STRUCTURE 74 ii GDS Associates, Inc.

4 5.7.1 FINDINGS RECOMMENDATIONS DATABASE AND TRACKING SYSTEMS FINDINGS RECOMMENDATIONS EFFECTIVE METHODS FOR ACHIEVING MAXIMUM PARTICIPATION AND SAVINGS BEST PRACTICES FOR HOME PERFORMANCE WITH ENERGY STAR PROGRAMS METHODS FOR MAXIMIZING PROGRAM PARTICIPATION AND ENERGY SAVINGS EVALUATION, MEASUREMENT AND VERIFICATION METHODS ENERGY EFFICIENCY TECHNOLOGIES TO CONSIDER 89 6 REVIEW OF REGIONAL HOME PERFORMANCE PROGRAM, CUSTOMER INCENTIVE PROGRAMS, INDUSTRY STUDIES AND OTHER RESEARCH FINDINGS RECOMMENDATIONS EVALUATION FINDINGS AND RECOMMENDATIONS IMPACT EVALUATION SUMMARY OF FINDINGS SUMMARY OF ASSESSMENT AND RECOMMENDATIONS PROCESS EVALUATION BEST PRACTICES LESSONS LEARNED SUMMARY OF ASSESSMENT AND RECOMMENDATIONS 121 APPENDIX A. TREAT MODEL ASSUMPTIONS FOR PROTOTYPE HOMES 128 APPENDIX B. SAMPLE EVALUATION MEASUREMENT AND VERIFICATION PLAN 140 APPENDIX C. OTHER HOME PERFORMANCE PROGRAM MANAGER SURVEYS 152 APPENDIX D. BEST PRACTICE REVIEW FINDINGS 163 ARIZONA S HOME PERFORMANCE WITH ENERGY STAR PROGRAM 164 ONCOR S HOME PERFORMANCE WITH ENERGY STAR PROGRAM 167 iii GDS Associates, Inc.

5 AEP PUBLIC SERVICE COMPANY OF OKLAHOMA HOME PERFORMANCE WITH ENERGY STAR PROGRAM 169 THE BUILDING PERFORMANCE INSTITUTE 173 HOME PERFORMANCE RESOURCE CENTER 176 THE NEW YORK HOME PERFORMANCE WITH ENERGY STAR PROGRAM 177 THE NEW JERSEY HOME PERFORMANCE WITH ENERGY STAR PROGRAM 178 RESIDENTIAL HVAC QUALITY INSTALLATION & MAINTENANCE 179 HOMEOWNER PERSPECTIVES AND MARKETING 181 MCKINSEY GLOBAL ENERGY AND MATERIALS U.S. ENERGY EFFICIENCY REPORT 186 U.S. EPA REVIEW OF APPLIANCE RECYCLING PROGRAMS 192 EPA ENERGY MANAGEMENT GUIDELINES AND BENCHMARKING BEST PRACTICES 194 iv GDS Associates, Inc.

6 1 Executive Summary GDS conducted an impact and process evaluation of Austin Energy s Home Performance with ENERGY STAR (HPwES) program. The following tasks were completed by GDS and the findings and recommendations from these activities are presented in this evaluation report. Task 1: Analyze Austin Energy s HPwES Program data to identify peak power, energy and dollar savings (kw, kwh, $), program costs and cost effectiveness using appropriate cost tests. Task 2: Evaluate Austin Energy s HPwES Program prioritization strategy to determine highest program energy savings potential. Task 3: Evaluate Austin Energy s HPwES Program elements/process, NOT including program marketing and outreach campaigns, contractor assignments and role of third party for scope of work assignments and inspection duties. Task 4: Identify lessons learned and best practices from Austin Energy s HPwES Program. Task 5: Conduct review of other utility HPwES and customer incentive programs, industry studies and other research to identify potential application to Austin Energy s HPwES Program. Task 6: Identify the most effective methods and measures for achieving maximum participation and efficiency rates, measurement and verification protocols, identification of energy efficiency technologies that might be introduced and that are not currently part of the program. Task 7: Provide recommendations for an Austin Energy residential conservation program that maximizes energy savings while minimizing the cost to the utility. 1.1 Findings The following sections contain a summary of GDS findings regarding the evaluation of Austin Energy s HPwES Program Impact Evaluation AE s rebated measures and packages of measures were evaluated using energy savings and cost effectiveness modeling. The measures were evaluated as individual and packaged measures in two prototypical baseline homes evaluated for (a) an all electric mechanical systems and for (b) a natural gas fired heating and domestic hot water mechanical system. The improvement measures are considered retrofit measures; therefore the total cost is used in the analysis because the savings are based on replacement of existing equipment. The following rebated individual measures were evaluated to be cost effective using the Total Resource Cost (TRC) test: 1 GDS Associates, Inc.

7 The addition of attic insulation from R11 to R26 The addition of attic insulation from R11 to R29 The addition of attic insulation from R11 to R38 The repair of leaking duct work and duct sealing Solar Window Film The Heat Pump Domestic Hot Water (DHW) Heater Air infiltration measures in the electrically heated homes 14 SEER Central Air Conditioners in the smaller Home A The following rebated individual measures failed the TRC cost test: Air infiltration measures in the natural gas heated homes Ground Source Heat Pumps Air Source Heat Pumps SEER 15, SEER 16 and SEER 17 Central Air Conditioners SEER 14 Central Air Conditioners in Home B (the larger home) The individual measures were combined into packages and the interactive savings were calculated for each package. Austin Energy s home performance bonus rebate is a great advantage for realizing savings for the program. The Air Source Heat Pump (ASHP) and Central AC measures are most cost effective when paired with additional measures. The combination of air sealing, duct sealing, duct distribution improvement and attic insulation to the highest level of R38 with or without solar window film are cost effective for all homes. The packages of measures result in annual MMBtu savings between 10% and 36%. The following measures, which are not currently eligible under Austin Energy s HPwES Program, were evaluated for cost effectiveness using the TRC test: CFL bulb installation and CFL fixture installation are cost effective as individual measures. However, due to the saturation of the area from the CFL coupon program this measure is not being considered for a direct rebate program. Low Flow water devices, aerators and showerhead measures, are cost effective in all four homes even without the consideration of water and sewer cost savings. Programmable thermostats modeled with a 5 hour setback period are cost effective in all four homes. On Demand DHW measures were not cost effective as individual measures. High efficiency DHW conventional units were not cost effective as individual measures. ENERGY STAR window replacement was not cost effective as an individual measure. 2 GDS Associates, Inc.

8 ENERGY STAR refrigerators and clothes washers were not cost effective as an individual measure at full cost Process Evaluation From interviews with program staff, a review of program documentation and from previous experience with HPwES Programs and other residential energy efficiency programs targeted toward existing buildings the following were identified as the best practices that should be continued as elements of the Austin Energy program and may serve as a model for others to replicate. Program Goals & Objectives: Both the 2007 NREL study and 2009 Sustained Excellence award support high achievements of Austin Energy in regards to the HPwES Program. Austin Energy has continually met all goals in terms of target participation numbers and has an extensive contractor network. Operation and Delivery: Austin Energy meets all of the HPwES Program operation requirements. A strong inspection group that is involved throughout the entire retrofit process, from the verification to the final inspection, is one of the key reasons for the success of the program. Austin Energy also meets national HPwES Program contractor guidelines and has a 20% value rule 1 to verify the quality of contractor work. Quality control. Having an Austin Energy inspector review each project and each contractor s performance is key to ensuring that: a) the program does no harm and b) cost effective improvements are made to the home. This often requires the education of homeowners in order for them to agree to make the recommended improvements. So while a quality review may investigate why certain cost effective measures were not implemented, it may reveal that the absence of the measure as a customer decision (for whatever reason) and not necessarily a shortcoming of the contactor. Home Performance with ENERGY STAR Certificate. Issuing an official document that certifies certain improvements have been made is a simple but very important best practice. It establishes, in writing from a credible source, that certain improvements have been made to the efficiency, health and comfort of the home. By having a certificate, a document that can stay with the property, it allows future owners, lenders, appraisers, realtors and all other stakeholders in the residential market to gain an understanding of the fact that the home has undergone specific energy improvements. Although it is not the silver bullet that transforms the residential market (appraisers still need to develop their own methodology via the Appraisal Institute to value these 1 A 20% value rule means that if a participating contractor fails 20% of their jobs within a six month period they will be pulled from the active list. 3 GDS Associates, Inc.

9 improvements), it, at a minimum, provides information to key market actors. This is something that more HPwES Programs should implement. Coordination and Communication: Internal program communications include a weekly newsletter that goes out to the Austin Energy staff announcing events, trainings and new program information, and monthly staff meetings. Participation: The number of customers that the program has served, even in a down economy is commendable. During the 2011 fiscal year, rebates reached 95% of Austin Energy s HPwES Program goal while the loans exceed the goal. Incentives: A variety of rebates and loan options are offered, including bonuses for completing all recommended conservation measures. Database and Tracking System: Data collected by the contractors to be entered in the Power Saver Program includes basic housing information such as square footage, the type of home, specific measures that qualify for rebates, account number, air test reports, and the rebate amounts. Continual Self Improvement. As intuitive as it may seem, not all programs have the ability to identify problems and proactively take measures to improve program implementation processes. This is something that GDS identified as a best practice of Austin Energy s HPwES. For example, an identified area that needed improvement was the need for electronic forms and ways of making the administration of the program less cumbersome. So often, program managers feel compelled to make a program better by instituting new policies, controls and requirements but with little or new actual improvement in the program overall. GDS commends Austin Energy in their efforts to streamline and simplify their processes. 1.2 Recommendations The following sections contain a summary of GDS recommendations based upon the evaluation of Austin Energy s HPwES Program Impact Evaluation The home performance bonus rebate should be expanded to include additional individual measures that can be combined to create more packages that are cost effective. The domestic hot water heater packages for all homes high efficiency storage, instant and heat pump water heaters are all cost effective when paired with attic insulation to the highest level of R38, air sealing and installation of programmable thermostats. The combination of air sealing, solar window film, programmable thermostat, ENERGY STAR refrigerator and clothes washer are cost effective for all four prototype homes. 4 GDS Associates, Inc.

10 The Central AC measures with SEER 14 and SEER 15 are cost effective when packaged with the following measures: o Attic insulation to R29, programmable thermostat o Attic insulation to R29, programmable thermostat, duct sealing and distribution improvement o Attic insulation to R29, programmable thermostat, duct sealing, distribution improvement and window solar film The Central AC measures with SEER 16 are cost effective for all three packages for the larger Home B and for Attic insulation to R29, programmable thermostat and window solar film for the smaller Home A. The ASHP measures with HSPF 8 / SEER 14 and HSPF 8 / SEER 15 are cost effective when packaged with the following measures: o Attic insulation to R29, programmable thermostat o Attic insulation to R29, programmable thermostat, duct sealing and distribution improvement o Attic insulation to R29, programmable thermostat, duct sealing, distribution improvement and window solar film The ASHP measures with HSPF 8.5 / SEER 16 and HSPF 9 / SEER17 are cost effective for all three packages for the larger Home B Process Evaluation GDS has identified the following as areas for improvement or lessons learned. Program Goals and Objectives: As a way of pushing the program to the next level, GDS recommends that Austin Energy set new goals in terms of program savings. GDS recommends that Austin Energy set a goal of obtaining a minimum of 20% energy savings for each participating home. Operation and Delivery: GDS recommends that Austin Energy require the following tests pre and post measure installation as part of the HPwES Program protocols: visual home inspection; blower door test to measure air leakage; duct blaster test to measure duct leakage; Manual J calculations for HVAC equipment sizing; and infrared test with an infrared camera to determine hot/cold spots and air movement through walls. Contractor Certification: GDS recommends that Austin Energy use the BPI certification and guidelines as well for its partner network. Contractor Training: Regular (e.g., monthly or quarterly) trainings are helpful in developing a superior home performance workforce. As part of the test in/test out procedures for the initial home assessment and final inspection, GDS has recommended several tests that are not currently part of the BPI requirements. GDS recommends that 5 GDS Associates, Inc.

11 Austin Energy offer monthly trainings to review program requirements, testing procedures, etc. that qualify for CEUs to the network of participating contractors, possibly in conjunction with existing or newly formed local or regional associations of home energy auditors and home performance contractors. GDS also recommends educating contractors so that there is a better understanding of HVAC commissioning; this has been identified as an area needing improvement in the program. The missing elements of this program (as well as many other existing home energy efficiency programs) is the proper training of home performance contractors to the correct sizing of HVAC equipment and distribution systems (ductwork). In new construction, which is the minimal energy codes and for ENERGY STAR Homes, right sizing has been a focus. However, in existing home programs, it is not often addressed and not often an area in which the implementation contractors are well versed. Requiring an element of training that focuses contractor s attention on the Air Conditioning Contractors of America s (ACCA) series of manuals that address right sizing will help develop a more educated and highly trained home performance workforce in the Austin area. Quality Assurance: Austin Energy should continue to require third party verification of installations and quality of work for 100% of HPwES Program projects. Austin Energy should require, as part of the final third party inspections, test outs for all tests conducted in initial home assessment. Post testing is important due to the inconsistent quality of installation and infrequent retro commissioning of equipment can increase space conditioning costs by 20% to 30%. Experts estimate that contractors install some 90% of HVAC equipment and insulation sub optimally, reducing efficiency by 20 30%. Austin Energy should continue to enforce the 20% value rule. This incents contractors to continue to perform quality work if they wish to continue as HPwES Program partners. Austin Energy staff should select 15 20% of all projects to receive a field quality insurance inspection. Projects should be selected on a random basis and at the request of the homeowner. Contractors should not inhibit or discourage homeowners from participating in the program quality assurance practices and such activity could result in disciplinary action. Coordination and Communication: GDS recommends that Austin Energy work on internal communications through the establishment of regular meetings and/or regular s to report program success, shortcomings, improvements, design changes, needs, etc. It is also important to consider who should be informed and what information should be disseminated on a regular basis. For example, employees fielding customer questions should be kept up to date on program design and implementation improvements while program management should be kept informed of program expenditures, participation levels, and savings. Additionally, GDS recommends that additional staff would enhance the program by providing more support to ensure the quality of the program. 6 GDS Associates, Inc.

12 Marketing and Customer Education: It is important to emphasize the non energy benefits of HPwES improvements when marketing and advertising the program, because some homeowners may not be aware that a whole house assessment can uncover performance issues in the home that directly affects the energy usage in the home. Participation and Barriers to Participation: Recommend working to mitigate the associated hassle of participation by migrating towards an integrated contractor approach and working towards reducing the burden of the application process. Recommend tailoring marketing efforts to focus on non energy benefits such as comfort, health, safety, and savings. Eligible Measures: GDS recommends Austin Energy review new technologies that have reached the level of commercial availability but need a stronger move into market transformation. For example, smart thermostats with IP and wireless capabilities are available and have the potential for savings. It is recommended that a review of these emerging technologies be initiated. Incentives: Rebates are favored over loans. Today s more educated homeowners understand the potential issues with accumulating additional debt and are therefore becoming more debt averse. Proper training of contractors and educating homeowners so that there is a better understanding of the fact that loans offered through a HPwES Program are low risk will help to encourage homeowners to use their own money rather than gravitating toward the so called free money or rebates only. Additionally, GDS recommends transitioning to a two path approach to incentives: (a) prescriptive and (b) performance based. The prescriptive approach would offer rebates a la carte for measures installed whereas the performance based approach would provide incentives proportional to the savings achieved. Database and Tracking System: Depending on the type of evaluation plan Austin Energy decides to proceed with for future iterations of the HPwES Program, GDS recommends Austin Energy standardize their database and tracking system for the program to ensure that all of the necessary data is collected and that it is reported consistently for all projects. Evaluation, Measurement & Verification: GDS recommends Option C of the IPMVP for the method to use to determine overall program kwh savings. Option C estimates savings for a whole facility and allows for assessing the interactive effects between various measures. The requirements for Option C include 24 months of continuous billing data (12 pre/12 post). 7 GDS Associates, Inc.

13 2 Program Overview Austin Energy has provided incentives, in the form of rebates and loans, to residential customers making energy efficiency improvements under the national HPwES Program. The efficiency improvements eligible under Austin Energy s HPwES Program include improvements to attic insulation, solar screens, window replacements, duct repair, duct sealing, and high efficiency heating and cooling systems. A variety of rebates and loan options are offered, including bonuses for completing all recommended conservation measures. 2.1 Goals and Objective One of the key goals of the national HPwES Program is to achieve a 20% overall savings for all the installed measures combined. The other metric of success is customer participation. The participation goals were developed by looking at the available funding (program budget) and at historical performance per unit (savings and cost) and then arriving at the number of participants (homes) based on that budget. 2.2 Rebate Program Measures Under the HPwES Rebate Program, customers may receive rebates for up to 20% of the cost of certain improvements, up to $1,575 per home. Rebates are offered for the following efficiency improvements. Table 2 1: Eligible Measures and Rebate Levels 2 Measure: Central AC or Heat Pump Package Unit AC or Heat Pump Attic Insulation to R 38 Solar Screens/Solar Film/ Low E Windows Radiant Barrier *Eligibility is determined on a case by case basis. Duct Replacement Duct Insulation External Combustion Air Attic Infiltration and Duct Sealing Duct System Performance Testing *Initial and final system performance tests and final blower door test required. Rebate Level Varies by efficiency levels; see tables below. Varies by efficiency levels; see tables below. Multiply the square footage of the home $ (per square foot) the R value added + $45 setup fee. $1.00 per square foot Multiply the square footage of accessible attic $0.10. $1.75 per linear foot. $1.25 per linear foot. $20.00 each. $0.12 per square foot. $200 per system. $50 per new return air improvement. 2 Home Performance with ENERGY STAR Rebate Amounts. th%20energy%20star/rebatelevels.htm 8 GDS Associates, Inc.

14 Table 2 2: Central AC or Heat Pump Rebate Levels Rebate Tier SEER EER Central Split Rebate Heat Pump Rebate $350 $ $450 $ & above 13.5 & above $550 $600 Table 2 3: New Package Unit Air Conditioner or Heat Pump Rebate Levels Rebate Tier SEER EER Central Split Rebate Heat Pump Rebate $400 $ & above 13.0 & above $500 $550 Participants may be eligible for Home Performance Bonus Rebates if a participant installs a new air conditioning unit or heat pump, sized to service at least 600 square feet per ton, and performs all of the following the weatherization measures as needed: Install additional attic insulation. Repair leaking AC ducts. Caulk plumbing and sinks. Weather strip doors. Install Low E windows, solar screens or awnings Install a radiant barrier. The rebate structure for the Home Performance Bonus programs is outlined below. Table 2 4: Home Performance Bonus Rebate Structure If Weatherization Rebate Total Is: Home Performance Bonus Is: $150 $250 $250 $250 $350 $400 $350 & above $ Program Statistics and Measures Implemented Austin Energy s HPwES Program serviced approximately 33,600 different projects. 3 The total number of loan projects is 7,924 and the total number of rebated projects is 25, A breakdown of the specific measures installed is provided in the following sections. 3 Project is defined as Bid_No in gdshpwes1.csv and includes both Rebate and Loan projects. 9 GDS Associates, Inc.

15 The following table contains the number of projects in which each measure was implemented. Table 2 5: Measure Installation Summaries 5 Measure: Specifications: No. Installations: Air Conditioner or Heat Pump HVAC 18,671 HVAC Bonus Rebate 4,469 HVAC Service 158 w/ Water Heater 4 External Combustion Air Furnace 529 w/ Water Heater 2,035 Duct Replacement 4,481 w/ Insulation 3,178 Additional Runs 695 Duct Insulation Unspecified 357 Drape or Bury 1,070 Air Infiltration & Duct Sealing Unspecified Air Infiltration 17,891 Air Infiltration <1600 9,261 Air Infiltration >1600 5,652 Air Infiltration > Duct System Performance Testing 2,010 Attic Insulation Unspecified 25,947 R0 R7 52 R8 R13 59 R14 R22 47 Solar Screens Unspecified 15,742 Eastern Shading 4,892 Northern Shading 15 Northeastern Shading 2,618 Northwestern Shading 3,209 Southeastern Solar Shading 2,989 Southern Solar Shading 5,654 Southwestern Solar Shading 4,447 Western Solar Shading 6,915 Window Films Skylight Covers 344 Low E Glass Window Replacement 276 Caulking and Weatherization Stripping Weatherization Bonus 9,993 Attic Radiant Barrier/Reflective Material Radiant Barrier 1,409 4 As tracked by Loan_Buydown and REBATE_AMT fields in file gdshpwes1.csv. 5 Defined as unique entries tracked in file: rebmrsr.csv 10 GDS Associates, Inc.

16 9,993 projects were eligible for the Home Performance Bonus Rebates; 4,469 projects were eligible for the HVAC Bonus Rebate. 6 The top ten measures tracked in the database as implemented in the HPwES Program include 7 : 1) Attic Insulation Unspecified 2) Air Conditioner or Heat Pump HVAC 3) Air Infiltration & Duct Sealing Unspecified 4) Solar Screens Unspecified 5) Weatherization Bonus Caulking and Weatherization Stripping 6) Air Infiltration <1,600 ft 2 7) Solar Shading Western 8) Solar Shading Southern 9) Air Infiltration >1,600 ft 2 10) Solar Shading Eastern The following table contains a summary of the HVAC equipment that was installed as part of the HPwES Program. Table 2 6: Installed HVAC Equipment Equipment Type Combined Unit AC Combined Unit HP No. Installations 20,809 3,145 Average Btu 32,400 3,800 Btu Range 23,000 70,000 9,000 62,500 Average Efficiency Rating 13.7% 13.3% Efficiency Rating Range 10.2% 20.0% 11.6% 18.0% Average SEER Rating SEER Rating Range Average EER Rating EER Rating Range File: rebmrsr.csv 7 These measures are ranked according to number of installation and not according to savings. 11 GDS Associates, Inc.

17 3 Evaluation Overview The following sections outline the methodology used by GDS to conduct an evaluation of Austin Energy s HPwES Program. 3.1 Impact Evaluation Overview GDS analyzed Austin Energy s HPwES data to identify savings in terms of avoided consumption and dollar savings (kw, kwh, $), program costs and cost effectiveness. GDS calculated the energy savings, program delivery costs, and cost effectiveness for the following: Each combination of weatherization measures offered; Total program costs to date; and Projected total program for entire two year period Energy Savings Model When selecting a model for energy savings, the EPA recommends basing the selection on the following criteria: 1) Objective. 2) Data requirements. 3) Simplest model that meets objective. Given the fact that Austin Energy was interested in understanding how individual measures performed when installed in an existing home in addition to gaining insight into how the measures interact to determine the cumulative effects on the total energy use of a home, GDS selected the Targeted Retrofit Energy Analysis (TREAT) model to identify energy and demand savings for the Home Performance measures and bundles of measures offered through the program. TREAT is a comprehensive energy analysis tool that can be used to: Create models quickly and easily with building component libraries; Calculate energy usage and predict energy savings; Calculate energy savings for individual improvements or assemble improvements in interactive packages; Calculate payback and savings to investment ratios (SIR); and Generate graphical reports. GDS used the TREAT model to identify energy and demand savings for the weatherization measures and bundles of measures offered through the HPwES Program. 12 GDS Associates, Inc.

18 It is important to realize that the impact analysis conducted for this evaluation is based on a typical Austin Energy customer home and common measures and packages of measures installed in Austin Energy s HPwES Program. The inputs to the TREAT model, described in detail in the following section, are based on primary and secondary research as well as engineering estimates and the knowledge of Austin Energy staff. While the model inputs were vetted, the models themselves were not calibrated to historical billing data. Thus the savings presented in this report should be viewed as an indicator of a measure s potential savings and not necessarily as actual savings as actual savings are dependent on a variety of variables, including those that cannot be model such as user behavior. For a more accurate estimate of actual program savings, GDS recommends Austin Energy conduct a billing analysis of their HPwES Program. More information on this type of evaluation is provided in Appendix B Baseline Homes Wherever possible, GDS used participant information tracked in the Austin Energy program database and information provided by Austin Energy program staff to establish the baseline energy use of homes prior to improvement. This information included: Home square footage, Existing insulation and weatherization levels, Existing infiltration, Existing window type, Thermostat set point, HVAC equipment specifications, Existing appliances, and Other data required by the TREAT model. GDS also relied on publically available data sources to model the typical home retrofitted in Austin Energy s HPwES Program; these included: U.S. Energy Information Administration (EIA) Residential Energy Survey (RECS) reports; and Home Performance with ENERGY STAR website and reports. After review of participants and program data, two baseline homes were modeled. These models were used to determine savings for various improvements with either electric heating and domestic hot water or natural gas heating and domestic hot water equipment. The homes were not reviewed for fuel switching. Two broad categories were determined: Home A was based on a smaller home built in the 1970s and Home B was based on a larger home built in the 13 GDS Associates, Inc.

19 1980s. These baseline homes assume mechanical equipment in the home is of the approximate vintage of the home. A summary of the model inputs, as well as average annual energy use for each home, is provided in the following table. Table 3 1: HPwES Model Home Assumptions TREAT Category Home A Home B Vintage 1970's 1980's Area 1245 sq ft 2400 sq ft Foundation Slab on Grade Attic Vented, Unconditioned Attic Wall Insulation 2x4 16 oc Fiberglass Batt (R12) Attic Insulation 2x8 16 oc Fiberglass Batt (R11) Slab Floor Insulation Uninsulated 4" Concrete Slab with Carpet (R2) Window Glazing Single Pane, Clear Double Pane, Clear Window Area ~ 13% of Wall Area Doors Two 36" Doors R2 Thermostat Non Programmable Lighting 50% CFL Bulb, 50% Incandescent Heating Set. Temp. 70 deg. F Cooling Set Temp. 77 deg. F Entering Cold Water Temp. 65 deg. F AC Output Capacity 36,000 Btu/hr AC SEER Duct Distribution Efficiency 85% Duct Insulation R Value R 2 R 5 Duct Leakage at 25PA / % conditioned sq ft 249 CFM / 20% 480 CFM / 20% 14 GDS Associates, Inc.

20 Table 3 2: HPwES Model Home Assumptions Natural Gas Equipment Heat and Hot Water Natural Gas TREAT Category Home A Home B Heating Natural Gas Furnace Forced air, Induced Draft Input Capacity 60,000 Btu/hr 80,000 Btu/hr Annual Efficiency 78% 80% Domestic Hot Water Natural Gas, Storage Water Heater Energy Factor 0.54 Annual Natural Gas Use therms/yr therms/yr Annual Electric Use 12,681.2 kwh/yr 15,502.2 kwh/yr Annual Energy Use MMBtu/yr MMBtu/yr Table 3 3: HPwES Model Home Assumptions Electric Equipment Heat and Hot Water Electric TREAT Category Home A Home B Heating Electric Air Source Heat Pump Input Capacity 36,000 Btu/hr 60,000 Btu/hr Annual Efficiency 6.3 HSPF 7 HSPF DHW Electric, Storage Water Heater Energy Factor 0.83 Annual Electric Use 18,027.7 kwh/yr 22,283.1 kwh/yr Annual Energy Use MMBtu/yr MMBtu/yr Appendix A includes TREAT reports providing information on the design heating and cooling load and base load for each of the four models. The design heating and cooling report presents results of the load sizing calculations. The base load report provides information on the base building energy consumption by appliances, domestic hot water and lightings Cost Effectiveness Models The selection of an appropriate benefit/cost test for energy efficiency programs requires consideration of existing state laws and regulations as well as the strengths and weaknesses of each benefit/cost test. According to the National Action Plan for Energy Efficiency report titled Understanding Cost Effectiveness of Energy Efficiency Programs, 8 the most common primary measurement of energy efficiency cost effectiveness is the Total Resource Cost (TRC) test. A 8 National Action Plan for Energy Efficiency, Understanding Cost Effectiveness of Energy Efficiency Programs, November GDS Associates, Inc.

21 positive TRC result indicates that the program will, over its lifetime, produce a net reduction in energy costs in the region where programs are being implemented. A standard methodology for energy efficiency program cost effectiveness analysis was published in California in 1983 by the California Public Utilities Commission and updated in December 1987, October 2001 and July It was based on experience with evaluating conservation and load management programs in the late 1970's and early 1980's. This methodology examines five perspectives: Total Resource Cost Test (TRC), Participant Test (PCT), Utility Cost Test (or Program Administrator Test) (PACT), Rate Impact Measure (RIM) Test, and Societal Cost Test (SCT). The table below summarizes the major components of these five benefit/cost tests. Examining this table is useful when trying to understand the differences among the five benefit/cost tests. Table 3 4: Components of Energy Efficiency Benefit/Cost Tests Component PCT PACT RIM TRC SCT Energy and capacity related avoided costs Benefit Benefit Benefit Benefit Additional resource savings Benefit Benefit Non materialized benefits Benefit Incremental equipment and installation costs 9 Cost Cost Cost Program overhead costs Cost Cost Cost Cost Incentive payments Benefit Cost Cost Bill savings Benefit Cost GDS has its own Benefit Cost Model which was used to compute the cost effectiveness of the various measures and measure packages eligible under Austin Energy s HPwES Program. The model was also used to compute the cost effectiveness of the overall HPwES Program as it was implemented to date. 10 The following inputs and the corresponding data sources were used to compute the benefitcost test ratios. 9 Total costs were used in this analysis as the installations were considered retrofit applications. Thus the baseline costs were assumed to be $0 making the incremental costs equal to the total costs. 10 A working copy of the model with the HPwES assumptions and inputs can be provided upon request. 16 GDS Associates, Inc.

22 Table 3 5: Benefit Cost Model Inputs and Data Sources Component Energy and capacity related avoided costs Additional resource savings Incremental equipment and installation costs Program overhead costs Incentive payments Bill savings Source Austin Energy Avoided Cost Data Engineering estimates Austin Energy Program data Engineering estimates Austin Energy Program expenditures Austin Energy Program data TREAT outputs Billing Analysis Austin Energy contracted GDS to assist in the evaluation of impacts associated with the HPwES Program. Per Austin Energy s request, GDS conducted a statistical billing analysis as one method for estimating program impacts. This section summarizes the analysis and findings of the study. The billing analysis provided a means for analyzing energy consumption for customers prior to and after enrollment in the HPwES Program. Using regression techniques, differences in energy consumption between the pre and post periods was quantified. The average difference measured between the two periods, controlling for factors other than the program, represents the estimated energy savings per home for all homes where customers have implemented one or more HPwES measures Model Specification Five alternative model specifications were tested, and while each provided similar results with respect to average energy savings per home, two are presented in this report. All models included monthly billing consumption for 560 individual customers and quantified a number of factors influencing household energy consumption, including number of days in the billing period, a time trend, heating degree days, and cooling degree days. Number of days in the billing period captures increases and decreases in monthly consumption due to varying days during a billing cycle. Number of days in the billing period was included in the billing history file provided by Austin Energy. The trend variable represents a time trend and takes the value of 1 through n for each premise and equates to the number of months corresponding to each premise in the modeling database. The trend variable accounts for increases in overall class consumption over time that was not captured by the other independent variables. The overall increase in consumption over time could be explained by different factors (increase in home size, increase in the number of end uses, declining real price of electricity, increases in number of people per household); however, these data series were 17 GDS Associates, Inc.

23 not available. Heating and cooling degree days capture the impacts of weather conditions over the course of the time periods modeled. A binary variable was included to identify the months during which a customer was enrolled in the HPwES Program (i.e., binary variable takes the value of 0 pre program and 1 post program implementation). The coefficient for this binary variable represents the average energy savings per home. The model determined to best capture the HPwES Program impacts was a panel model, which also included a series of binary variables, one for each customer, to differentiate differences in energy consumption across all customers due to factors that could not be included in the model due to data limitations (e.g., size of home, number of people in home, housing characteristics, electric end uses in home) 11. This model took the following form: Where: a,b,c, k Estimated coefficients m Billing month α Index representing the number of HPwES consumers CON Indicator variable for each control consumer α CDD Cooling degree days (base 65) in billing month HDD Heating degree days (base 65) in billing month DAYS Number of days in billing month PROGRAM Indicator for months when consumer was enrolled in the HPwES program ε Error term in billing month The model specification presented above was revised to replace the PROGRAM parameter, which represents the average monthly HPwES Program impact, with twelve individual program parameters, once for each month of the year. The model parameters and statistics for this alternative specification are provided in Section 4.5. This alternative model provides a means for estimating the differences in program impacts throughout the year. In theory, the greater program impacts would occur in the hottest months (July and August) and correspond to kwh savings from air conditioning. However, because the model was estimated using monthly billing cycle consumption rather than calendar month consumption, the greatest impacts 11 The homes in the data set were not limited to all electric homes however GDS did not have gas data and therefore did not include gas usage in the analysis. 18 GDS Associates, Inc.

24 correspond to those billing cycles represented in the model as August and September. 12 While the alternative model specification provides a means of estimating the potential variation in program impacts across months, it was concluded that the most reasonable estimate of program impacts across the year is one based on the single PROGRAM parameter as specified in the model presented above and in Section 4.5, Table The two models presented in this report represent panel models, which include billing data for each individual customer. The binary variables included in the model (CONS1 CONS560) represent intercepts for each customer; therefore, a single model intercept was not included, which is common in panel models. This was accomplished by including the NOINT option in the modeling process. An intercept term could have been included, and if so, binary variables for CONS2 CONS560 (the model intercept represents CONS1) would represent the differences between each customer to CONS1. The estimated coefficients for the trend, CDD, HDD, number of days, and program variables would be the same as the model estimated using the NOINT option. Data The data used to perform the analysis was provided by Austin Energy. Billing data was available for the period beginning October 2008 and ending February In order to develop a database with a relatively equal number of pre and post enrollment period observations 13, data from December 2009 through February 2012 was used to perform the modeling analysis. Data for a handful of customers was excluded due to excessively high consumption values or lack of observations in the pre and post periods Process Evaluation Overview The review of Austin Energy s HPwES Program was twofold. First, GDS developed a clear picture of how the current program worked through a review of program project documents and 12 As noted by one reviewer, it is unclear why the savings in October are comparable to August and July. GDS surmised that it could be that the billing periods lag actual consumption to the degree, for instance, that October consumption is influenced to a large degree by consumption during the last half of September. On the other hand, it could be that the model is over specified with respect to the number of program indicator variables. While they do show the potential variation in program impacts from a low impact month to a high impact month, use of the 12 month average impact in MODEL1 is more reasonable. 13 : GDS targeted 12 months of pre data and 12 months of post data how it varied by customer. Overall, there were approximately 7600 observations pre program and 7700 observations post program implementation premises were excluded. There was no specific cutoff for determining an outlier. Subjectively removed the 18 based on review of consumption patterns and identification of outliers. Extremely high positive or negative values. 19 GDS Associates, Inc.

25 interviews with Austin Energy HPwES Program staff. Information collected during these activities was used to document the program theory and design. In addition, in order to make recommendations for future program design and delivery, the process evaluation included a review of similar programs in the industry that may be considered best practices for this type of program. Results from all of these activities provide lessons learned from the projects completed to date, inform and support the impact evaluation to better understand how the savings were achieved, and identify what, if any, barriers exist as part of the program design. The process evaluation was designed to answer the following questions: How is the program working? What is working well and how could it be improved? What barriers are there to program participation? How well does the coordination work between Austin Energy and its partners? What are the effective marketing channels for reaching eligible customers? What are other effective program designs for HPwES based programs? What is most effective in providing energy efficiency improvements for these types of customers? Review of Program Materials To gain an understanding of the current Austin Energy HPwES Program operation, the evaluation team reviewed several program documents and reports that were available. These included: Austin Energy website, Austin Energy HPwES Program materials, Austin Energy HPwES Application, and National ENERGY STAR Home Performance website and materials. Our review of these documents was used to develop the researchable questions for the process evaluation, describe the current program operation and procedures, and generate discussion topics for program staff interviews Program Staff Interviews The program manager surveys are an essential component of the evaluation and establish a foundation for all evaluation activities. The surveys allow GDS to fully understand the HPwES Program as it is currently being offered by Austin Energy. We also discuss future plans for the program and how the process evaluation can best inform those proposed changes. This information provides the context necessary to develop and implement all other process, impact, and market evaluation efforts. GDS developed interview guides that were used to capture program related data from program managers and staff. These interviews helped us to assess the background, intended operations, and processes of the program s stated (and unstated) goals and objectives. The interviews also helped to identify the perceived barriers to program up take, previous experience with the 20 GDS Associates, Inc.

26 program, and modifications to any program components based on the previous program cycle as well as the rationale for those modifications. Questions regarding the following topics were discussed: a) Program Scope and Goals, b) Program Implementation, c) Data Tracking and Reporting, d) Program Progress, e) Program Marketing and Resources, f) Communications, and g) Conclusions Review of Relevant Programs and Best Practices In reviewing and comparing similar HPwES Programs and best practice reports, GDS researched several databases including DSIRE (Database of State Incentives for Renewables and Efficiency) as well as state specific websites. Additionally, websites such as the Department of Energy and ACEEE (American Council for an Energy Efficient Economy) were consulted for information regarding home performance programs throughout the country. A summary of the findings and conclusions from the review of these programs and best practice reports can be found in Section GDS Associates, Inc.

27 4 Impact Evaluation The following sections contain GDS s findings and recommendations from the impact evaluation of Austin Energy s HPwES Program. Working copies of all models used to develop savings and cost effectiveness estimates can be provided upon request. The findings and recommendations contained in these sections address the following tasks: Task 1: Analyze Austin Energy s HPwES Program data to identify peak power, energy and dollar savings (kw, kwh, $), program costs and cost effectiveness using appropriate cost tests. Task 2: Evaluate Austin Energy s HPwES Program prioritization strategy to determine highest program energy savings potential. Task 7: Provide recommendations for an Austin Energy residential conservation program that maximizes energy savings while minimizing the cost to the utility. 4.1 Energy Efficiency Improvements The following list of measures was evaluated for savings using TREAT for each baseline home. The annual fuel savings for each individual measure, annual cost savings for each home ($0.90 per therm, $0.113 per kwh), percent annual MMBtu reduction and Return on Investment (ROI) using customer cost after rebate are included in the tables following the list of measures. The improvement measures are incorporated into the existing baseline homes and are considered retrofit measures. For retrofit measures the total cost is used in the analysis because the savings are based on replacement of existing equipment. ROI = (Measure Life * Annual Savings + Rebate Measure Cost) / (Measure Cost Rebate) An ROI greater than 0.0 indicates that a customer will recoup all of the costs associated with the measure installation. However, there may be other benefits (e.g., comfort, safety, etc.) that cannot be quantified and represented in the ROI calculation, thus some judgment is also required to determine the true worth of a project. Also, when considering benefits and costs from a more global scale (i.e., looking at benefits to an electric system as opposed to a singular customer), cost effectiveness tests such as the TRC are more indicative of EE benefits and costs Infiltration Reduction Air infiltration reduction of the home was reduced from 0.75 ACH nat to 0.60 ACH nat for base Home A and from 0.60 ACH nat to 0.50 ACH nat for base Home B. 22 GDS Associates, Inc.

28 The cost assumptions were based on the average cost of air infiltration for homes with square footage less than 1600 s.f. as tracked in the database. The value was set at $575 per home with an Austin Energy rebate 15 for base Home A of $149 and base Home B of $ Additional Attic Insulation The program database tracked three basic levels of additional attic insulation. Addition of R15 attic insulation to the R11 baseline with an average cost of $0.29 per square foot as determined from the 228 participants with this measure with cost included in the database. For base Home A the cost is $361 with an Austin Energy rebate 16 of $110; base Home B has a cost of $696 with an Austin Energy rebate of $171. Addition of R18 attic insulation to the R11 baseline with an average cost of 45 per square foot as determined from the average of 686 participants with cost included in the database. For base Home A the cost is $361 with an Austin Energy rebate of $123; base Home B has a cost of $1080 with an Austin Energy rebate of $196. Addition of R27 attic insulation to the R11 baseline with an average cost of $0.76 per square foot as determined from the average of 203 participants with cost included in the database. For base Home A the cost is $946 with an Austin Energy rebate of $163; base Home B has a cost of $1824 with an Austin Energy rebate of $ Cooling System Improvements Central AC (Natural Gas Homes) The efficiency categories were chosen to approximate the rebate categories for the existing cooling programs. Replacement of Central A/C with SEER 14 SEER Unit: Cost based on 7002 installations between 14 and 15 SEER with cost for an average cost of $3,998 and a maximum rebate of $400. Replacement of Central A/C with SEER 15 SEER Unit: Cost based on 3238 installations between 15 and 16 SEER with cost for an average cost of $4,898 with a rebate of $350. Replacement of Central A/C with SEER 16 SEER Unit: Cost based on 3073 installations between 16 and 17 SEER with cost for an average cost of $6,686 with a rebate of $450. Replacement of Central A/C with SEER 17 SEER Unit: Cost based on 566 installations greater than or equal to 17 SEER with cost for an average cost of $8,580 with a rebate of $ HVAC Improvements ASHP (Electric Homes) The efficiency categories were chosen to approximate the rebate categories for the existing air source heat pump programs. 15 Base Home A is 1245 sq ft; Base Home B is 2400 sq ft. The infiltration rebate is based on $.12 per sq ft. 16 The insulation rebate is based on sq ft x $.0035 x added R value + $45 setup fee. 23 GDS Associates, Inc.

29 Replacement of ASHP with HSPF 8 / SEER 14 Unit: Cost based on 704 installations between 14 and 15 SEER with cost for an average cost of $4,569 and a maximum rebate of $450. Replacement of ASHP with HSPF 8 / SEER 15 Unit: Cost based on 582 installations between 15 and 16 SEER with cost for an average cost of $6,018 with a rebate of $400. Replacement of ASHP with HSPF 8.5 / SEER 16 Unit: Cost based on 155 installations between 16 and 17 SEER with cost for an average cost of $7,735 with a rebate of $500 Replacement of ASHP with HSPF 9 / SEER 17 Unit: Cost based on 79 installations greater than or equal to 17 SEER with cost for an average cost of $8,263 with a rebate of $ Domestic Hot Water Improvement Replacement of conventional storage hot water units with either: Instant water heaters: Electric 0.99 EF, Natural Gas 0.82 EF Higher Efficient Storage Water Heaters: Electric 0.94 EF, Natural Gas 0.62 EF Heat Pump Water Heater: 3.2 EF The cost basis for this measure was an assumed $2,000 for instant, $1,000 for storage water heaters, and $2,700 for heat pump water heater. 17 The heat pump water heater has an associated rebate of $ Lighting and Appliance Replacements Two appliance replacements were modeled ENERGY STAR Refrigerator ($800) and ENERGY STAR Clothes Washer ($750). For the clothes washer the reduced laundry assumptions of 3 loads per week for the smaller base Home A and 5 loads per week for the larger base Home B was continued from the base home laundry assumptions. Through the City of Austin s WashWise Rebate program the participant could be eligible for a clothes washer rebate $25 for homes with natural gas water heaters and $50 for homes with electric water heaters. Compact fluorescent bulbs (CFLs) 13W ($3 per bulb) and pin based fixtures 14W ($22 per fixture) were used to upgrade the existing fixtures. The baseline homes were considered to have already replaced 50% of the existing bulbs with CFL bulbs based on the saturation of the CFL bulb coupon program by Austin Energy. The bulb replacement measure is for the remainder of the incandescent bulbs to be replaced with CFLs, the CFL fixture replacement is considered to include all fixtures. 17 Gas Networks Efficiency program in Massachusetts for PY2012 includes $500 rebate for 0.82 EF on demand tankless water heaters, $800 for 0.95 EF on demand tankless water heaters and $100 for 0.67 EF storage water heaters. Previous years included a $50 rebate for 0.62 EF storage water heaters. Various Electric programs include a negotiated price for installation of Marathon high efficiency electric water heaters. 24 GDS Associates, Inc.

30 4.1.7 Low Flow Devices One combined water savings measure was considered, the replacement of the home s existing aerators and showerheads. Each home was assumed to need three 1.5 gpm aerators ($5 each) and two 1.75 gpm low flow showerheads ($35 each). Savings are based on demand hot water load reductions water savings were not included Programmable Thermostats Installation of programmable thermostats with 5 hours per day of reduced settings with an associated cost of $125 for this measure. The database had relocated thermostat pricing at $50 each. The default setting for programmable thermostat savings is for an 8 hour setback, to be more conservative this was reduced to a 5 hour daily setback. The cooling season thermostat setback is defined to be from 77 to 85 degrees and the heating season setback is defined to be from 70 to 60 degrees Distribution System Improvement The following efficiency improvements were modeled: Repair leaking ducts to reduce total duct leakage from the base home 20% to 10%. Increase overall distribution efficiency from 85% to 90%. The cost basis used the average cost from the 8,728 measures of Duct Insulation/Replacement/Drape for projects with cost and unit at $6.45 per linear foot (LF) and $761 per home. An estimated $60 rebate is included for this measure. Rebate items for repairing ducts include $1.75 per linear foot for duct replacement and $1.25 per linear foot for duct insulation Window Improvements Two measures were considered for window improvements. The replacement of the windows with ENERGY STAR windows (U=0.40 and SHGC=0.40) with cost based on the 268 project average cost of $29.80 per square foot or approximately $450 per 3x5 window. The application of window film to the existing windows with cost estimated at $83 per window with an associated Austin Energy rebate of $15 per window. 4.2 Individual Measure Savings The following tables summarize the results from the TREAT models for each baseline home and efficiency improvement. The tables include the following metrics: Annual Savings in Therms, Annual Savings in kwh, 25 GDS Associates, Inc.

31 Seasonal Demand Savings in kw 18 Annual Monetary Savings, Percent Annual MMBtu Reduction 19, and Return on Investment Ratio. 18 The GDS Cost Ben Model uses load shapes to allocate the winter and summer energy demand (kw) based on the peak and off peak seasonal allocation of energy savings (kwh) from the annual energy savings (kwh) provided by the TREAT modeling of the measures. 19 GDS has provided % MMBtu savings as a level playing field for assessing the energy savings potential of measures and packages given that some measures impact both electric and natural gas consumption. 26 GDS Associates, Inc.

32 Table 4 1: Base Home A Natural Gas Improvements Improvement Type Measure ECM Efficiency Home A Annual Savings (therms) Home A Annual Savings (kwh) Winter Demand Savings (kw) Summer Demand Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost Lighting Replacement CFL Bulbs 13W CFL (21 bulbs) (7.7) $68 1.9% 15.0 Indoor Temperature Control Thermostat Programmable Thermostat $83 4.6% 8.9 Low Flow Device Aerators Showerhead 1.5 gpm aerator 1.75 gpm showerhead $63 9.0% 4.2 Surface Insulation Attic Insulation R11 (base) to R $51 3.5% 4.0 Surface Insulation Attic Insulation R11 (base) to R $64 4.5% 2.7 Lighting Replacement CFL Fixtures 14W Fixtures (7 fixtures) (10.2) $90 2.5% 2.2 Distribution System Duct Repair and Air Sealing 90% Distribution Efficiency Total Duct Leakage 10% $88 4.7% 1.5 Surface Insulation Attic Insulation R11 (base) to R $78 5.4% 1.5 Window Improvement Solar Window Film Glazing to e=.1 on surface $73 5.0% 1.1 Domestic Hot Water DHW Instant 0.82 EF $ % 0.2 Cooling System Central AC SEER 14/12 EER 0.0 2, $ % (0.1) Infiltration Reduction Infiltration Reduction 0.6 ACH $24 2.7% (0.2) Cooling System Central AC SEER 15/12.5 EER 0.1 2, $ % (0.2) Domestic Hot Water DHW Storage 0.62 EF $60 4.0% (0.2) Window Replacement Replacement U = 0.40; SHGC = , $ % (0.3) Cooling System Central AC SEER 16/13 EER 0.0 2, $ % (0.4) Appliance Replacement Refrigerator 585 kwh/yr (2.9) $39 1.3% (0.4) Cooling System Central AC SEER 17/13.5 EER (0.1) 2, $ % (0.5) Appliance Replacement Clothes Washer ENERGY STAR $11 1.6% (0.8) The measure with the greatest annual energy savings for this baseline home is the replacement of the Central AC System. 27 GDS Associates, Inc.

33 The measure with the greatest ROI is the installation of CFLs bulbs in high use light fixture. Table 4 2: Base Home B Natural Gas Improvements Improvement Type Measure ECM Efficiency Home B Annual Savings (therms) Home B Annual Savings (kwh) Winter Demand Savings (kw) Summer Demand Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost Lighting Replacement CFL Bulbs 13W CFL (40 bulbs) (16.42) 1, $ % 13.8 Indoor Temperature Control Thermostat Programmable Thermostat $88 4.5% 9.6 Low Flow Device Aerators Showerhead 1.5 gpm aerator 1.75 gpm showerhead $65 7.4% 4.4 Surface Insulation Attic Insulation R11 (base) to R $91 5.3% 3.3 Distribution System Duct Repair and Air Sealing 90% Distribution Efficiency Total Duct Leakage 10% $ % 2.9 Surface Insulation Attic Insulation R11 (base) to R $ % 2.3 Lighting Replacement CFL Fixtures 14W Fixtures (18 fixtures) (21.40) 1, $ % 1.9 Surface Insulation Attic Insulation R11 (base) to R $ % 1.3 Window Improvement Solar Window Film Glazing to e=.1 on surface , $ % 0.9 Infiltration Reduction Infiltration Reduction 0.5 ACH $31 2.9% 0.6 Domestic Hot Water DHW Instant 0.82 EF $91 5.7% (0.1) Cooling System Central AC SEER 14/12 EER (0.01) 1, $ % (0.2) Cooling System Central AC SEER 15/12.5 EER (0.01) 2, $ % (0.2) Cooling System Central AC SEER 16/13 EER , $ % (0.4) Cooling System Central AC SEER 17/13.5 EER , $ % (0.5) Window Replacement Window Replacement U = 0.40; SHGC = 0.40 (15.44) 1, $ % (0.5) Domestic Hot Water DHW Storage 0.62 EF $29 2.2% (0.6) Appliance Replacement Refrigerator 585 kwh/yr (19.28) $22 0.9% (0.7) Appliance Replacement Clothes Washer ENERGY STAR (24) (0.0) (0.0) $8 1.1% (0.9) 28 GDS Associates, Inc.

34 The measure with the greatest annual energy savings for this baseline home is the replacement of the Central AC System; however, it has a negative ROI and fails the TRC test. TRC test results can be found in Section 4.4. The measure with the greatest ROI is the installation of CFL Bulbs in light fixtures. Table 4 3: Base Home A Electric Improvements Improvement Type Measure ECM Efficiency Home A Annual Savings (kwh) Winter Demand Savings (kw) Summer Demand Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost Lighting Replacement CFL Bulbs 13W CFL (21 bulbs) $68 3.1% 14.9 Low Flow Device Aerators Showerhead 1.5 gpm aerator 1.75 gpm showerhead $ % 10.6 Indoor Temperature Control Thermostat Programmable Thermostat $79 3.9% 8.5 Surface Insulation Attic Insulation R11 (base) to R $59 2.9% 4.9 Surface Insulation Attic Insulation R11 (base) to R $74 3.6% 3.3 Lighting Replacement CFL Fixtures 14W Fixtures (7 fixtures) $83 4.1% 2.0 Surface Insulation Attic Insulation R11 (base) to R $90 4.4% 1.9 Window Improvement Solar Window Film Glazing to e=.1 on surface $84 4.1% 1.5 Distribution System Duct Repair and Air Sealing 90% Distribution Efficiency Total Duct Leakage 10% $85 4.2% 1.4 Domestic Hot Water DHW HPWH 3.2 EF $ % 1.0 Infiltration Reduction Infiltration Reduction 0.6 ACH $33 1.6% 0.2 Window Replacement Window Replacement U = 0.40; SHGC = $ % (0.2) HVAC System ASHP HSPF 8 / SEER $ % (0.3) Domestic Hot Water DHW Instant 0.99 EF $64 3.2% (0.4) Domestic Hot Water DHW Storage 0.94 EF $46 2.3% (0.4) HVAC System ASHP HSPF 8 / SEER $ % (0.4) HVAC System ASHP HSPF 9 / SEER $ % (0.5) 29 GDS Associates, Inc.

35 HVAC System ASHP HSPF 8.5 / SEER $ % (0.5) Appliance Replacement Clothes Washer ENERGY STAR $25 1.2% (0.6) Appliance Replacement Refrigerator 585 kwh/yr $22 1.8% (0.7) The measure with the greatest annual energy savings for this baseline home is the replacement of the existing water heater with a Heat Pump Water Heater. The measure with the greatest ROI is the installation of CFL bulbs in high use fixtures. Table 4 4: Base Home B Electric Improvements Improvement Type Measure ECM Efficiency Home B Annual Savings (kwh) Winter Demand Savings (kw) Summer Demand Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost Indoor Temperature Control Thermostat Programmable Thermostat $ % 16.1 Lighting Replacement CFL Bulbs 13W CFL (40 bulbs) $ % 13.2 Low Flow Device Aerators Showerhead 1.5 gpm aerator 1.75 gpm showerhead $ % 11.8 Surface Insulation Attic Insulation R11 (base) to R $ % 3.8 Distribution System Duct Repair and Air Sealing 90% Distribution Efficiency Total Duct Leakage 10% $ % 2.7 Surface Insulation Attic Insulation R11 (base) to R $ % 2.6 Lighting Replacement CFL Fixtures 14W Fixtures (18 fixtures) $ % 1.8 Surface Insulation Attic Insulation R11 (base) to R $ % 1.5 Domestic Hot Water DHW HPWH 3.2 EF $ % 1.3 Infiltration Reduction Infiltration Reduction 0.5 ACH $37 1.5% 0.9 Window Improvement Solar Window Film Glazing to e=.1 on surface $ % 0.8 Domestic Hot Water DHW Instant 0.99 EF $73 2.9% (0.3) HVAC System ASHP HSPF 8 / SEER $ % (0.3) Domestic Hot Water DHW Storage 0.94 EF $52 2.1% (0.3) 30 GDS Associates, Inc.

36 HVAC System ASHP HSPF 8 / SEER $ % (0.4) HVAC System ASHP HSPF 9 / SEER $ % (0.5) HVAC System ASHP HSPF 8.5 / SEER $ % (0.5) Window Replacement Window Replacement U = 0.40; SHGC = $ % (0.5) Appliance Replacement Refrigerator 585 kwh/yr $22 1.4% (0.7) Appliance Replacement Clothes Washer ENERGY STAR $22 0.9% (0.7) The measure with the greatest annual energy savings for this baseline home is the replacement of the existing water heater with a Heat Pump Water Heater. The measure with the greatest ROI is the installation of programmable thermostats. 31 GDS Associates, Inc.

37 4.3 Measure Package Savings The individual measures were combined into packages and the interacted savings were calculated for each package. The following packages were evaluated for savings using TREAT for each baseline home. The annual interacted fuel savings for each package, annual dollar savings for each home ($0.90 per therm, $0.113 per kwh), percent annual MMBtu reduction and ROIs using customer cost after rebate are included after each package description. The package measure life in the ROI calculation was based on annual interactive MMBtu savings for each measure multiplied by associated measure life divided by total annual interactive MMBtu savings. Table 4 6 through Table 4 15 contain the annual savings (therms, kwh, kw, $) and ROIs for various measure packages. The following table summarizes the packages analyzed for ease of reference. Table 4 5: Measure Packages Analyzed Table Measure Package Table 4 6 Additional attic insulation to the highest R level of R38, Air sealing to reduce infiltration, Duct repair and Duct sealing Table 4 7 Air sealing to reduce infiltration, Installation of programmable thermostats, Application of solar window film to existing windows and Replacement of refrigerator and clothes washer with ENERGY STAR appliances. Table 4 8 Additional attic insulation to the highest R level of R38, Application of solar window film to existing windows, Air sealing to reduce infiltration, Duct repair and Duct sealing. Table 4 9 Additional attic insulation to the highest R level of R38, Air sealing to reduce infiltration, Installation of programmable thermostats, and Replacement of existing water heater with either o High efficiency storage, o On demand water heater or o Heat pump water heater. Table 4 10 Replacement of the existing central air conditioner with a high efficiency unit, Addition of attic insulation to the middle R level of R29 and Addition of programmable thermostats. Table 4 11 Replacement of the existing central air conditioner with a high efficiency unit, Addition of attic insulation to the middle R level of R29, 32 GDS Associates, Inc.

38 Addition of programmable thermostats, Duct repair and Duct sealing. Table 4 12 Replacement of the existing central air conditioner with a high efficiency unit, Application of solar window film to existing windows, Addition of attic insulation to the middle R level of R29, Addition of programmable thermostats, Duct repair and Duct sealing. Table 4 13 Replacement of the existing ASHP with a high efficiency unit, Addition of attic insulation to the middle R level of R29 and Addition of programmable thermostats. Table 4 14 Replacement of the existing ASHP with a high efficiency unit, Addition of attic insulation to the middle R level of R29, Addition of programmable thermostats, Duct repair and Duct sealing. Table 4 15 Replacement of the existing ASHP with a high efficiency unit, Application of solar window film to existing windows, Addition of attic insulation to the middle R level of R29, Addition of programmable thermostats, Duct repair and Duct sealing. 33 GDS Associates, Inc.

39 The following package includes: Additional attic insulation to the highest R level of R38, Air sealing to reduce infiltration, Duct repair and Duct sealing. Table 4 6: Air Sealing, Duct Improvement and Attic Insulation Home A Home B Home A Elec Home B Elec Additional Attic Insulation (R11 to R38) Infiltration Reduction (A from 0.75 to 0.60 ACH Nat; B from.60 to.50 ACH Nat) Duct Distribution Efficiency (85% to 90%) Total Duct Leakage (20% to 10%) Annual Savings (Therms) Annual Savings (kwh) Winter Demand Savings (kw) Summer Demand Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost , $178 12% , $286 16% 1.4 N/A 1, $194 10% 1.1 N/A 2, $298 15% 1.5 The following package includes Air sealing to reduce infiltration, Installation of programmable thermostats, Application of solar window film to existing windows and Replacement of refrigerator and clothes washer with ENERGY STAR appliances. Table 4 7: Air Sealing, Duct Improvement, Solar Film, ES Appliances and Thermostat Home A Home B Home A Elec Home B Elec Infiltration Reduction (A from 0.75 to 0.60 ACH Nat; B from.60 to.50 ACH Nat) Solar Window Film Refrigerator, Clothes Washer Annual Savings (Therms) Annual Savings (kwh) Programmable Thermostat Winter Demand Savings (kw) Summer Demand Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost , $226 14% , $276 12% 0.4 N/A 2, $249 12% 0.4 N/A 3, $340 17% GDS Associates, Inc.

40 The following package includes: Additional attic insulation to the highest R level of R38, Application of solar window film to existing windows, Air sealing to reduce infiltration, Duct repair and Duct sealing. Table 4 8: Air Sealing, Duct Improvement, Solar Film and Attic Insulation Home A Home B Home A Elec Home B Elec Additional Attic Insulation (R11 to R38) Solar Window Film Infiltration Reduction (A from 0.75 to 0.60 ACH Nat; B from.60 to.50 ACH Nat) Duct Distribution Efficiency (85% to 90%) Annual Savings (Therms) Total Duct Leakage (20% to 10%) Winter Demand Savings (kw) Annual Savings (kwh) Summer Demand Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost , $241 16% , $386 19% 1.2 N/A 2, $266 13% 1.1 N/A 3, $399 20% GDS Associates, Inc.

41 The following package includes: Additional attic insulation to the highest R level of R38, Air sealing to reduce infiltration, Installation of programmable thermostats, and Replacement of existing water heater with either o High efficiency storage, o On demand water heater or o Heat pump water heater. Table 4 9: Air Sealing, Attic Insulation, DHW, and Thermostat DHW Additional Attic Insulation (R11 to R38) Infiltration Reduction (A from 0.75 to 0.60 ACH Nat; B from.60 to.50 ACH Nat) Programmable Thermostat Efficient Storage DHW (Nat Gas 0.62 EF, Elec 0.94 EF) OR On Demand DHW ( Nat Gas 0.82 EF, Elec 0.99 EF) Annual Savings (Therms) Heat Pump Water Heater (Elec 3.2 EF) Winter Summer Annual Savings Demand Demand (kwh) Savings (kw) Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost Home A Storage , $239 16% 0.8 Home B Storage , $294 17% 0.9 Home A Elec Storage N/A 2, $244 12% 0.8 Home B Elec Storage N/A 3, $373 18% 1.4 Home A Instant , $291 20% 0.7 Home B Instant , $346 21% 0.8 Home A Elec Instant N/A 2, $262 13% 0.5 Home B Elec Instant N/A 3, $394 19% 1.0 Home A Elec HPWH N/A 4, $560 27% 1.3 Home B Elec HPWH N/A 6, $738 36% GDS Associates, Inc.

42 The following package includes: Replacement of the existing central air conditioner with a high efficiency unit, Addition of attic insulation to the middle R level of R29 and Addition of programmable thermostats. Table 4 10: Central AC, Attic Insulation, and Thermostat SEER Annual Savings (Therms) Central Air Conditioning (SEER 14, 15, 16, 17) Additional Attic Insulation (R11 to R29) Annual Savings (kwh) Programmable Thermostat Winter Demand Savings (kw) Summer Demand Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost Home A , $344 16% 0.4 Home B , $382 16% 0.5 Home A , $364 17% 0.2 Home B , $411 17% 0.3 Home A , $382 18% (0.1) Home B , $437 18% 0.1 Home A , $397 18% (0.2) Home B , $459 19% (0.1) The following package includes: Replacement of the existing central air conditioner with a high efficiency unit, Addition of attic insulation to the middle R level of R29, Addition of programmable thermostats, Duct repair and Duct sealing. 37 GDS Associates, Inc.

43 Table 4 11: Central AC, Attic Insulation, Duct Improvement, and Thermostat SEER Annual Savings (Therms) Central Air Conditioning (SEER 14, 15, 16, 17) Additional Attic Insulation (R11 to R29) Programmable Thermostat Duct Distribution Efficiency (85% to 90%) Total Duct Leakage (20% to 10%) Winter Demand Savings (kw) Annual Savings (kwh) Summer Demand Savings (kw) Annual Savings ($) % Annual MMBTU Reduction Home A , $394 19% 0.4 Home B , $461 20% 0.6 Home A , $412 20% 0.2 Home B , $487 20% 0.4 ROI Customer Cost Home A , $428 21% (0.0) Home B , $509 21% 0.1 Home A , $441 21% (0.2) Home B , $529 22% (0.0) The following package includes: Replacement of the existing central air conditioner with a high efficiency unit, Application of solar window film to existing windows, Addition of attic insulation to the middle R level of R29, Addition of programmable thermostats, Duct repair and Duct sealing. Table 4 12: Central AC, Attic Insulation, Duct Improvement, Solar Film, and Thermostat SEER Annual Savings (Therms) Central Air Conditioning (SEER 14, 15, 16, 17) Solar Window Film Additional Attic Insulation (R11 to R29) Programmable Thermostat Duct Distribution Efficiency (85% to 90%) Total Duct Leakage (20% to 10%) Winter Demand Savings (kw) Annual Savings (kwh) Summer Demand Savings (kw) Annual Savings ($) % Annual MMBTU Reduction Home A , $441 23% 0.4 Home B , $535 22% 0.5 Home A , $457 23% 0.2 Home B , $557 22% 0.4 ROI Customer Cost Home A , $471 24% (0.0) Home B , $575 18% 0.1 Home A , $483 24% (0.2) Home B , $592 23% (0.0) 38 GDS Associates, Inc.

44 The following package includes: Replacement of the existing ASHP with a high efficiency unit, Addition of attic insulation to the middle R level of R29 and Addition of programmable thermostats. Table 4 13: ASHP, Attic Insulation and Thermostat ASHP (HSPF 8/SEER 14, HSPF 8/SEER 15, HSPF 8.5/SEER 16, HSPF 9/SEER 17) Additional Attic Insulation (R11 to R29) HSPF/SEER Annual Savings (kwh) Programmable Thermostat Winter Summer Demand Demand Savings (kw) Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost Home A Elec 8/14 3, $362 18% 0.2 Home B Elec 8/14 3, $445 22% 0.4 Home A Elec 8/15 3, $380 19% (0.1) Home B Elec 8/15 4, $472 23% 0.1 Home A Elec 8.5/16 3, $403 20% (0.2) Home B Elec 8.5/16 4, $504 25% (0.0) Home A Elec 9/17 3, $422 21% (0.3) Home B Elec 9/17 4, $531 26% (0.1) 39 GDS Associates, Inc.

45 The following package includes: Replacement of the existing ASHP with a high efficiency unit, Addition of attic insulation to the middle R level of R29, Addition of programmable thermostats, Duct repair and Duct sealing. Table 4 14: ASHP, Attic Insulation, Duct Improvement, and Thermostat ASHP (HSPF 8/SEER 14, HSPF 8/SEER 15, HSPF 8.5/SEER 16, HSPF 9/SEER 17) Additional Attic Insulation (R11 to R29) Programmable Thermostat Duct Distribution Efficiency (85% to 90%) HSPF/SEER Total Duct Leakage (20% to 10%) Winter Summer Annual Savings Demand Demand (kwh) Savings (kw) Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost Home A Elec 8/14 3, $408 20% 0.1 Home B Elec 8/14 4, $519 25% 0.4 Home A Elec 8/15 3, $424 21% (0.1) Home B Elec 8/15 4, $543 27% 0.1 Home A Elec 8.5/16 3, $444 22% (0.3) Home B Elec 8.5/16 5, $570 28% (0.0) Home A Elec 9/17 4, $461 23% (0.3) Home B Elec 9/17 5, $591 29% (0.1) 40 GDS Associates, Inc.

46 The following package includes: Replacement of the existing ASHP with a high efficiency unit, Application of solar window film to existing windows, Addition of attic insulation to the middle R level of R29, Addition of programmable thermostats, Duct repair and Duct sealing. Table 4 15: ASHP, Attic Insulation, Duct Improvement, Solar Film, and Thermostat ASHP (HSPF 8/SEER 14, HSPF 8/SEER 15, HSPF 8.5/SEER 16, HSPF 9/SEER 17) Solar Window Film Additional Attic Insulation (R11 to R29) Programmable Thermostat Duct Distribution Efficiency (85% to 90%) HSPF/SEER Total Duct Leakage (20% to 10%) Winter Summer Annual Savings Demand Demand (kwh) Savings (kw) Savings (kw) Annual Savings ($) % Annual MMBTU Reduction ROI Customer Cost Home A Elec 8/14 4, $458 22% 0.2 Home B Elec 8/14 5, $590 23% 0.4 Home A Elec 8/15 4, $472 23% (0.0) Home B Elec 8/15 5, $609 24% 0.1 Home A Elec 8.5/16 4, $490 24% (0.2) Home B Elec 8.5/16 5, $634 25% (0.0) Home A Elec 9/17 4, $504 25% (0.2) Home B Elec 9/17 5, $652 26% (0.0) 41 GDS Associates, Inc.

47 4.4 Cost Effective Energy Efficiency Improvements The individual measures and package savings, potential rebates and measure lives of measures were inputted into the GDS Benefit Cost Model to determine lifetime cost effectiveness. Below is a table of the measure lives used for the improvements. The Air Source Heat Pump and Central Air Conditioner measure lives were from the more conservative estimates of the specific ENERGY STAR Calculator assumptions. The other improvement measure lives are from various Technical Resource Manuals and studies 20. Table 4 16: Measure Lives Efficiency Measure Measure Life Aerators 7 Air Sealing 15 Air Source Heat Pump 12 Attic Insulation 25 Central Air Conditioning 14 CFL Bulbs 7 CFL Fixture 7 Clothes Washer 11 Duct Sealing/Repair Retrofit 20 Heat Pump Water Heater 12 Instant Water Heater 20 Programmable Thermostat 15 Refrigerator Retrofit 12 Showerheads 7 Solar Window Film 20 Storage Water Heater 13 Window Replacement 25 For each model home, the list of measures and packages were evaluated and are listed in descending order of cost effectiveness of the TRC test Massachusetts Technical Reference Manual for Estimating Savings from Energy Efficiency Measures, October 2011; GDS Associates, Inc (2007) Measure Life Report: Residential and Commercial/Industrial Lighting and HVAC Measures. Prepared for The New England State Program Working Group. 21 The PACT test is not calculated for those measures that do not have claimed rebates as part of the screening. 42 GDS Associates, Inc.

48 The top ten rebated measures based on the TRC calculation for homes with Natural Gas Heat and Water Heating for both Home A and Home B are: 1) All three levels of Attic Insulation 2) Repair of Ducts and Duct Sealing 3) Both DHW packages with Air Sealing, Attic Insulation to R38 and programmable thermostats 4) Solar Window Film applied to existing windows 5) Air Sealing, Duct Sealing and Attic Insulation to R38 6) Air Sealing, Duct Sealing, Attic Insulation to R38 and Solar Window Film 7) SEER 14 Air Conditioning replacement with Attic Insulation to R29, and programmable thermostat Based on Annual MMBtu Savings for homes with Natural Gas Heat and Water Heating nine of the top ten were the same for Home A and Home B 1) All four Air Conditioning replacements that included attic to R29, Repairs of Ducts and Duct Sealing, Solar Window Film and programmable thermostats. 2) All four Air Conditioning replacements that included attic to R29, Repairs of Ducts and Duct Sealing, and programmable thermostats. 3) Air Sealing, Attic Insulation to R38, programmable thermostats and instant DHW 4) SEER 17 Air Conditioning replacement with attic to R29 and programmable thermostat (Home A Nat Gas) 5) Air Sealing, Duct Sealing, Attic Insulation to R38 and Solar Window Film (Home B Nat Gas) The top ten rebated measures based on the TRC calculation for homes with Electric Heat and Water Heating for both Home A and Home B are: 1) All three levels of Attic Insulation 2) Repair of Ducts and Duct Sealing 3) All three DHW packages with Air Sealing, Attic Insulation to R38 and programmable thermostats 4) Solar Window Film applied to existing windows 5) Air Sealing, Duct Sealing and Attic Insulation to R38 6) Air Sealing, Duct Sealing, Attic Insulation to R38 and Solar Window Film Based on Annual kwh Savings for homes with Electric Heat and Water Heating the top ten for Home A and Home B were the same 43 GDS Associates, Inc.

49 1) Air Sealing, Attic Insulation to R38, programmable thermostats and HP DHW 2) All four ASHP replacements that included Attic insulation to R29, Repairs of Ducts and Duct Sealing, Solar Window Film and programmable thermostats. 3) All four ASHP replacements that included Attic insulation to R29, Repairs of Ducts and Duct Sealing, and programmable thermostats. 4) SEER 17 ASHP replacement that included Attic Insulation to R29 and programmable thermostats The following tables include all the measures and packages in descending order of the TRC test Total costs were used in this analysis as the installations were considered retrofit applications. Thus the baseline costs were assumed to be $0 making the incremental costs equal to the total costs. For more information on how the cost effectiveness ratios were computed, please refer to Section GDS Associates, Inc.

50 Table 4 17: Benefit Cost Evaluation Base Home A Natural Gas Efficiency Measure Total Cost ($) Rebate Annual Savings (therms) Annual Savings (kwh) TRC SCT PACT PCT RIM Programmable Thermostat $125 N/A N/A W Incandescent to 13W CFL $30 N/A (7.7) N/A Aerators and Low Flow showerheads $85 N/A N/A Attic Insulation: R11 (base) to R26 $361 $ Attic Insulation: R11 (base) to R29 $560 $ Repair Leaking AC Ducts 85% to 90% Distribution Efficiency; Total Duct Leakage 20% to 10% $761 $ All fixtures to 14W CFL Fixtures $195 N/A (10.2) N/A Attic Insulation: R11 (base) to R38 $946 $ Window Film applied to existing windows $830 $ Air Sealing, Duct Sealing, Attic to R38 $2,282 $ , Air Sealing, Duct Sealing, Attic to R38, Solar Film $3,112 $ , Air Sealing, Attic to R38, T stat, DHW Storage $2,646 $ , Air Sealing, Attic to R38, T stat, DHW Instant $3,646 $ , SEER 14, Attic to R29, T stat $4,683 $ , SEER 14, Attic to R29, Ducts, T stat $5,444 $ , SEER 14, Attic to R29, Ducts, Solar film, T stat $6,274 $ , Air Sealing, Solar film, Refrigerator, Clotheswasher, T stat $3,080 $ , SEER 15, Attic to R29, T stat $5,583 $ , SEER 15, Attic to R29, Ducts, Solar film, T stat $7,174 $ , SEER 15, Attic to R29, Ducts, T stat $6,344 $ , Central AC: SEER 14/12 EER $3,998 $ , SEER 16, Attic to R29, Ducts, Solar film, T stat $8,962 $ , SEER 16, Attic to R29, Ducts, T stat $8,132 $ , SEER 16, Attic to R29, T stat $7,371 $ , Instant Water Heater Gas 0.82 EF $2,000 N/A N/A Central AC: SEER 15/12.5 EER $4,898 $ , SEER 17, Attic to R29, Ducts, Solar film, T stat $10,856 $ , SEER 17, Attic to R29, Ducts, T stat $10,026 $ , SEER 17, Attic to R29, T stat $9,265 $ , ENERGY STAR Window $4,500 N/A , N/A Central AC: SEER 16/13 EER $6,686 $ , Storage DHW Gas 0.62 EF $1,000 N/A N/A Air Infiltration: 0.75 to 0.6 ACH $575 $ Central AC: SEER 17/13.5 EER $8,580 $550 (0.1) 2, ENERGY STAR Refrigerator $800 N/A (2.9) N/A ENERGY STAR Clothes Washer $750 N/A N/A GDS Associates, Inc.

51 Table 4 18: Benefit Cost Evaluation Base Home B Natural Gas Efficiency Measure Total Cost ($) Rebate Annual Savings (therms) Annual Savings (kwh) TRC SCT PACT PCT RIM Programmable Thermostat $125 N/A N/A W Incandescent to 13W CFL $60 N/A (16.4) 1, N/A Aerators and Low Flow showerheads $85 N/A N/A Repair Leaking AC Ducts 85% to 90% Distribution Efficiency; Total Duct Leakage 20% to 10% $761 $ Attic Insulation: R11 (base) to R26 $696 $ Attic Insulation: R11 (base) to R29 $1,080 $ Air Sealing, Duct Sealing, Attic to R38 $3,160 $ , Attic Insulation: R11 (base) to R38 $1,824 $ All fixtures to 14W CFL Fixtures $390 N/A (21.4) 1, N/A Air Sealing, Duct Sealing, Attic to R38, Solar Film $4,654 $ , Window Film applied to existing windows $1,494 $ , Air Sealing, Attic to R38, T stat, DHW Storage $3,524 $ , Air Sealing, Attic to R38, T stat, DHW Instant $4,524 $ , SEER 14, Attic to R29, Ducts, T stat $5,964 $ , SEER 14, Attic to R29, T stat $5,203 $ , SEER 14, Attic to R29, Ducts, Solar film, T stat $7,458 $ , SEER 15, Attic to R29, Ducts, T stat $6,864 $ , Air Sealing, Solar film, Refrigerator, Clotheswasher, T stat $3,744 $ , SEER 15, Attic to R29, Ducts, Solar film, T stat $8,358 $ , SEER 15, Attic to R29, T stat $6,103 $ , SEER 16, Attic to R29, Ducts, T stat $8,652 $ , SEER 16, Attic to R29, Ducts, Solar film, T stat $10,146 $ , SEER 16, Attic to R29, T stat $7,891 $ , SEER 17, Attic to R29, Ducts, Solar film, T stat $12,040 $1, , SEER 17, Attic to R29, Ducts, T stat $10,546 $ , Central AC: SEER 14/12 EER $3,998 $400 (0.0) 1, SEER 17, Attic to R29, T stat $9,785 $ , Central AC: SEER 15/12.5 EER $4,898 $350 (0.0) 2, Air Infiltration:.6 ACH to.5 ACH $575 $ Instant DHW Gas 0.82 EF $2,000 N/A N/A Central AC: SEER 16/13 EER $6,686 $ , Central AC: SEER 17/13.5 EER $8,580 $ , ENERGY STAR Windows $8,100 N/A (15.4) 1, N/A Storage DHW Gas 0.62 EF $1,000 N/A N/A ENERGY STAR Refrigerator $800 N/A (19.3) N/A ENERGY STAR Clothes Washer $750 N/A 11.6 (24) N/A GDS Associates, Inc.

52 Table 4 19: Benefit Cost Evaluation Base Home A Electric Efficiency Measure 47 GDS Associates, Inc. Total Cost ($) Rebate Annual Savings (kwh) TRC SCT PACT PCT RIM 60W Incandescent to 13W CFL $30 N/A N/A Programmable Thermostat $125 N/A N/A Aerators and Low Flow showerheads $85 N/A N/A Attic Insulation: R11 (base) to R26 $361 $ Attic Insulation: R11 (base) to R29 $560 $ Attic Insulation: R11 (base) to R38 $946 $ Repair Leaking AC Ducts 85% to 90% Distribution $761 $ Efficiency; Total Duct Leakage 20% to 10% Window Film applied to existing windows $830 $ Air Sealing, Attic to R38, T stat, DHW HPWH $4,346 $ All fixtures to 14W CFL Fixtures $195 N/A N/A Air Sealing, Duct Sealing, Attic to R38 $2,282 $ Air Sealing, Duct Sealing, Attic to R38, Solar Film $3,112 $ Air Sealing, Attic to R38, T stat, DHW Storage $2,646 $ Air Sealing, Attic to R38, T stat, DHW Instant $3,646 $ Air Sealing, Solar film, Refrigerator, Clotheswasher, $3,080 $ T stat Heat Pump DHW Elec 3.2 EF $2,700 $ ASHP HSPF 8 SEER 14, Attic to R29, T stat $5,254 $ ASHP HSPF 8 SEER 14, Attic to R29, Ducts, Solar film, $6,845 $ T stat ASHP HSPF 8 SEER 14, Attic to R29, Ducts, T stat $6,015 $ ASHP HSPF 8 SEER 15, Attic to R29, Ducts, Solar film, $8,294 $ T stat Air Infiltration: 0.75 to 0.6 ACH $575 $ ASHP HSPF 8 SEER 15, Attic to R29, T stat $6,703 $ ASHP HSPF 8 SEER 15, Attic to R29, Ducts, T stat $7,464 $ ASHP HSPF 8.5 SEER 16, Attic to R29, Ducts, Solar $10,011 $ film, T stat ASHP HSPF 9 SEER 17, Attic to R29, Ducts, Solar film, $10,539 $ T stat ASHP HSPF 8 / SEER 14 $4,569 $ ASHP HSPF 8.5 SEER 16, Attic to R29, T stat $8,420 $ ASHP HSPF 8.5 SEER 16, Attic to R29, Ducts, T stat $9,181 $ ENERGY STAR Windows $4,500 N/A N/A ASHP HSPF 9 SEER 17, Attic to R29, T stat $8,948 $ ASHP HSPF 9 SEER 17, Attic to R29, Ducts, T stat $9,709 $783 4, ASHP HSPF 8 / SEER 15 $6,018 $ ASHP HSPF 9 / SEER 17 $8,263 $ ASHP HSPF 8.5 / SEER 16 $7,735 $ Instant DHW Elec 0.99 EF $2,000 N/A N/A Storage DHW Elec 0.94 EF $1,000 N/A N/A ENERGY STAR Clothes Washer $750 N/A N/A ENERGY STAR Refrigerator $800 N/A N/A

53 Table 4 20: Benefit Cost Evaluation Base Home B Electric 48 GDS Associates, Inc.

54 Efficiency Measure Annual Total Cost ($) Rebate Savings (kwh) TRC SCT PACT PCT RIM Programmable Thermostat $125 N/A N/A Aerators and Low Flow showerheads $85 N/A N/A W Incandescent to 13W CFL $60 N/A N/A Attic Insulation: R11 (base) to R26 $696 $ Repair Leaking AC Ducts 85% to 90% Distribution $761 $ Efficiency; Total Duct Leakage 20% to 10% Attic Insulation: R11 (base) to R29 $1,080 $ Attic Insulation: R11 (base) to R38 $1,824 $ Air Sealing, Duct Sealing, Attic to R38 $3,160 $ Air Sealing, Attic to R38, T stat, DHW Storage $3,524 $ Air Sealing, Attic to R38, T stat, DHW HPWH $5,224 $1, Air Sealing, Duct Sealing, Attic to R38, Solar Film $4,654 $ All fixtures to 14W CFL Fixtures $390 N/A N/A Window Film applied to existing windows $1,494 $ Air Sealing, Attic to R38, T stat, DHW Instant $4,524 $ Air Sealing, Solar film, Refrigerator, Clotheswasher, $3,744 $ T stat Heat Pump DHW Elec 3.2 EF $2,700 $ ASHP HSPF 8 SEER 14, Attic to R29, T stat $5,774 $ ASHP HSPF 8 SEER 14, Attic to R29, Ducts, T stat $6,525 $ ASHP HSPF 8 SEER 14, Attic to R29, Ducts, Solar film, $8,019 $ T stat ASHP HSPF 8 SEER 15, Attic to R29, Ducts, T stat $7,974 $ ASHP HSPF 8 SEER 15, Attic to R29, T stat $7,223 $ ASHP HSPF 8 SEER 15, Attic to R29, Ducts, Solar film, $9,468 $ T stat Air Infiltration: 0.75 to 0.6 ACH (A);.6 ACH to.5 ACH $575 $ (B) ASHP HSPF 8.5 SEER 16, Attic to R29, Ducts, Solar $11,195 $1, film, T stat ASHP HSPF 8.5 SEER 16, Attic to R29, Ducts, T stat $9,701 $ ASHP HSPF 8.5 SEER 16, Attic to R29, T stat $8,940 $ ASHP HSPF 9 SEER 17, Attic to R29, Ducts, Solar film, $11,723 $1, T stat ASHP HSPF 9 SEER 17, Attic to R29, Ducts, T stat $10,229 $ ASHP HSPF 9 SEER 17, Attic to R29, T stat $9,468 $ ASHP HSPF 8 / SEER 14 $4,569 $ ASHP HSPF 8 / SEER 15 $6,018 $400 2, ASHP HSPF 9 / SEER 17 $8,263 $ ASHP HSPF 8.5 / SEER 16 $7,735 $ Instant DHW Elec 0.99 EF $2,000 N/A N/A ENERGY STAR Windows $8,100 N/A N/A Storage DHW Elec 0.94 EF $1,000 N/A N/A ENERGY STAR Refrigerator $800 N/A N/A ENERGY STAR Clothes Washer $750 N/A N/A GDS Associates, Inc.

55 4.5 Billing Analysis Results The results derived from the statistical billing analysis indicate that the HPwES program produces reduces average annual energy consumption by 22%. On a seasonal basis, it is estimated that the program reduces average energy consumption by 14% during non cooling months and by 27% during cooling months. The model parameters and statistics are provided in the following tables. Table 4 21: Billing Analysis Parameters and Statistics Model 1 The SAS System The REG Procedure Model: MODEL1 Dependent Variable: kwh_use BHTUSE Number of Observations Read Number of Observations Used NOTE: No intercept in model 23. R-Square is redefined. Analysis of Variance Sum of Mean Source DF Squares Square F Value Pr > F Model <.0001 Error Uncorrected Total Root MSE R-Square Dependent Mean Adj R-Sq Coeff Var Parameter Estimates Parameter Standard Variable Label DF Estimate Error t Value Pr > t trend <.0001 avgcdd <.0001 avghdd <.0001 No_Days BHVDYS <.0001 program < The coefficients for all 560 individual customer binary variables (intercepts) are not included in this printout. The developed model was a panel model, which included billing data for each individual customer. The binary variables included in the model (CONS1 CONS560) represent intercepts for each customer, so an overall model intercept was not included, or needed. An intercept term could have been included, and if so, binary variables for CONS2 CONS560 (the model intercept would have represented CONS1) would represent the differences between each customers base load and that of CONS1. The estimated coefficients for the trend, CDD, HDD, number of days, and program variables would be the same as the model estimated using the NOINT option. Our model specification is a little cleaner than one with a model intercept and binary variables for CONS2 CONS GDS Associates, Inc.

56 Table 4 22: Billing Analysis Parameters and Statistics Model 2 The SAS System The REG Procedure Model: MODEL2 Dependent Variable: kwh_use BHTUSE Number of Observations Read Number of Observations Used NOTE: No intercept in model. R-Square is redefined. Analysis of Variance Sum of Mean Source DF Squares Square F Value Pr > F Model <.0001 Error Uncorrected Total Root MSE R-Square Dependent Mean Adj R-Sq Coeff Var Parameter Estimates Parameter Standard Variable Label DF Estimate Error t Value Pr > t trend avgcdd <.0001 avghdd <.0001 No_Days BHVDYS <.0001 PROGRAM PROGRAM <.0001 PROGRAM <.0001 PROGRAM <.0001 PROGRAM <.0001 PROGRAM <.0001 PROGRAM <.0001 PROGRAM <.0001 PROGRAM <.0001 PROGRAM <.0001 PROGRAM <.0001 PROGRAM The DEPENDENT MEAN of 1075kWH represents the average energy use for all of the participants and is used to determine the percentage savings for the program. 51 GDS Associates, Inc.

57 4.6 Prioritization Strategies Austin Energy had several questions regarding program prioritization strategies, based on the impact evaluation findings, which could enhance the HPwES Program. The questions and GDS recommendations are presented below. Are there any measures which are not cost effective that should be dropped from the HPwES Program? The public perception as supported by vendor advertising has created the impression that windows are an energy savings measure; however, window replacements are rarely justified as an energy efficient measure and should be dropped by the program. Although the air source heat pump and central air conditioning measures are generally not cost effective as individual measures. They are cost effective when combined with air sealing and duct improvements and should be continued in the program. Are there economies of scale associated with delivering packages of measures? For example, should CFLs or water heater tank wraps always be delivered and installed (along with other needed measures) at each participating home? Generally, pairing highly cost effective measures with measures that generate greater savings at a higher cost is an effective way to generate more savings while maintaining overall cost effectiveness for each project. For example, in the all electric Home A model, installing R38 attic insulation generates annual savings of 798 kwh at a TRC value of However, combining that attic insulation with air and duct sealing leads to an annual savings increase of 215% (e.g., annual energy savings of 1,721 kwh) with a slightly reduced TRC value of 2.04 (e.g., 22% reduction). Thus, packaging measures is a great way to maximize savings while minimizing costs and allows for the installation of measures with greater savings potential that many not be as cost effective as other measures. For more information on the trade offs between the various packaged measures and cost effectiveness, please refer to Section 4.4. Are there other program strategies that should be considered in order to maximize the program s energy savings potential? GDS recommends that Austin Energy consider the following strategies to maximize the program s energy savings potential: 52 GDS Associates, Inc.

58 Program promotion through municipalities (Mailings, program displays in municipal building, etc). Participate at special community events to promote the HPwES Program. Create a robust marketing campaign to increase the HPwES brand awareness. One day sales and marketing seminar for contractors that provide them the skills to communicate the importance of the HPwES Program to prospective customer. Develop a cooperative advertising program that leverages advertising dollars and encourages contractors to promote the program. For more information on program design recommendations, please refer to Section 5.2. Are there any new cost effective measures that should be added to the program? Low flow water measures aerators and showerheads should be included in the program. The hot water savings alone make them cost effective even without the water/sewer savings. Programmable thermostats were shown to be cost effective as individual measures. This measure may require some hands on training for the homeowner to use the setbacks to achieve savings. For more information on cost effective measures that should be included in Austin Energy s HPwES Program, please refer to Section GDS Associates, Inc.

59 5 Process Evaluation The following sections contain GDS findings from the following tasks: Task 3: Evaluate Austin Energy s HPwES Program Elements/Processes, NOT including program marketing and outreach campaigns, contractor assignments, and role of third party for scope of work assignments and inspection duties. Task 4: Identify Lessons Learned and Best Practices from Austin Energy s HPwES Program. Austin Energy s HPwES Program has been in operation since 1982 when it was known as the Whole House Program. In 2004 Austin Energy partnered with the U.S. EPA and the program became known as the Home Performance with ENERGY STAR Program. Because Austin Energy has been operating a whole house type program for thirty years, the program staff believes that the company has worked out a lot of the process issues. Moreover, if issues do arise, Austin Energy believes that their extensive experience with operating such a program allows them to quickly develop solutions that will keep the program successful. This longevity is key to presenting a consistent message to customers regarding energy efficiency. GDS also notes that the staff we interviewed and interacted with was very knowledgeable and that Austin Energy has extensive institutional experience with the HPwES Program and the Whole House Program. The following sections include GDS s review and analysis of Austin Energy s current HPwES Program and provides recommendations for improving the program going forward. A summary of lessons learned and best practices resulting from the process evaluation is also provided at the end of this report in Section Goals and Objectives Findings One of the key goals of the National HPwES Program is to get a 20% savings overall, for all installed measures combined. Austin Energy s HPwES Program metric of success was based on customer participation levels. The participant goals are developed by looking at the available funding (program budget) and at historical performance per unit (savings and cost) and then arriving at the number of participants (homes) based on that budget. The program staff interviews uncovered the following additional program goals: 54 GDS Associates, Inc.

60 Develop and maintain a strong contractor base that continues to be knowledgeable about building science and the program process and guidelines as outlined by the Home Performance ENERGY STAR Residential Handbook. Longer term, to continue to develop an extensive program which adopts new cost effective technologies that will support Austin Energy s objective of looking at homes as a whole system. To help gauge how well the program goals have been met; GDS asked program management staff the following question: On a scale of one to five, where one is not met at all and five is met well, to what extent do you believe that the goals of this program have been met? One of the program managers gave the program a four out of five, noting that there is there is always room for improvement. He gave it a four because the program has continually exceeded expectations. However, for the last fiscal year, rebates reached only 95% of the program goal. Although this was not considered totally accurate as some of the rebates were rolled into the loan figures at one point. It was also noted that this was accomplished in a down year. The other interview participant gave the program a five noting that the program has performed very well from year to year and that it has been in existence for so many years because it is a proven program. Austin Energy s customers were described as not just caring about the environment but also pretty technology savvy a receptive, well educated market that is focused more on the whole house approach to energy efficiency. A 2007 study by the National Renewable Energy Laboratory (NREL) in collaboration with the Pacific Northwest National Laboratory (PNNL) 25 concluded that the HPwES Program sponsored by Austin Energy had a very significant impact on reducing average cooling electricity for participating households. Overall, average cooling savings were in the range of 25% 35%, and appear to be robust under various criteria for the number of households included in the analysis. In 2009, Austin Energy s HPwES Program was awarded the National ENERGY STAR Sustained Excellence Award in recognition of its consistent high performance each year. Both the 2007 study and 2009 award support the high rating, in regard to meeting goals, given to the HPwES Program by the program staff. 25 Home Performance with ENERGY STAR : Utility Bill Analysis on Homes Participating in Austin Energy s Program, Technical Report NREL/TP , July GDS Associates, Inc.

61 5.1.2 Recommendations GDS commends Austin Energy for reaching such high levels of customer participation in the HPwES Program to date. As a way of pushing the program to the next level, GDS recommends that Austin Energy set new goals in terms of program savings. GDS recommends that Austin Energy set a goal of obtaining a minimum of 20% energy savings for each participating home. While Austin Energy is currently achieving this for some of its HPwES Program participants, setting this as metric for success shifts the focus from program throughput (i.e., number of customers served) to savings achievements. By changing the metric of success, other aspects of the program will need retooling as well. GDS discusses these program modifications throughout Section 4.5. GDS recommends that Austin Energy continue to work towards their existing goals of a strong contractor network and adopting new cost effective technologies. Both of these objectives will help Austin Energy achieve the primary goal of cost effective energy savings. More concrete recommendations on these two topics are discussed in Section 5.2 and respectively. 5.2 Operation and Delivery According to the HPwES Sponsor Guide 26, the following program operations are required: Home Performance Assessment or Test In Inspection Results and Recommended Improvements: o Summary of Home Performance Assessment Findings o Improvement Recommendations o Estimation of Improvement Costs o Estimation of Energy Savings for Recommended Measures Installation of Measures Post Installation Tests or Test Out The following sections address the operation and delivery aspects of Austin Energy s HPwES Program Overview of Program Operation To help gauge how successful program implementation has been, each interview participant was asked the following question: On a scale of one to five, where one is not successful and five is very successful, do you believe that the implementation of the program has been successful? 26 Home Performance with ENERYG STAR Sponsor Guide Version 1.1; August 2011: 34c9. 56 GDS Associates, Inc.

62 Both interviewees rated the success of program implementation as a four out of five. A strong inspection group that's involved throughout the retrofit process, from the verification to the final inspection, was mentioned as one of the key reasons for the success of the program. The Austin Energy inspector makes sure that the contractor s recommendations are appropriate for the home. The rebate loan amounts are also reviewed at this point. If the job passes a final inspection it moves to the rebate payment stage. Additional detail can be found in the inspection process flowcharts for HPwES Rebate and HPwES Loan shown on the two next pages. These flowcharts reflect the paper process which has been replaced by an automated system (Power Saver), but the basic steps are still applicable. One of the reasons that was cited by program staff for not rating program success as a five out of five is that Austin Energy has not worked out the wrinkles of its transition from paper to electronic forms using the Power Saver program. 57 GDS Associates, Inc.

63 Figure 1: HPwES Rebate Program Inspection Flowchart 58 GDS Associates, Inc.

64 Figure 2: HPwES Loan Program Inspection Flowchart 59 GDS Associates, Inc.

65 Based on the previous flowcharts, program review, and staff interviews, GDS commends Austin Energy for meeting all of the HPwES Program operation requirements. However, the Power Saver Software is not working as planned. There are issues with the transition to electronic forms in Power Saver. Austin Energy is trying to get writable PDFs and different permissions to be included in the Power Saver Software. GDS commends Austin Energy for acknowledging these issues and working to resolve them in a timely manner. These process improvements will help make participation easier which is key to retaining interested customers Home Performance Protocols The program staff sees their whole home approach as one of the most successful aspects of the program and GDS agrees. However, Austin Energy staff also indicated that training contractors to better understand and implement a whole house approach is an area for improvement. GDS has provided more information on enhancing contractor training in Section and designing program goals to maximize this whole house initiative in Section This section focuses more on the testing procedures utilized in HPwES Programs to determine savings potential and/or verify quality installations and savings. According to the national HPwES program materials, HPwES programs typically require the following tests to determine applicable measures and savings potential 27 : Visual home inspection; Blower Door Test to measure air leakage; Duct Blaster Test to measure duct leakage; and Infrared test with an infrared camera to determine hot/cold spots and air movement through walls. A variety of testing procedures is used by HPwES Programs. GDS conducted a survey of ten programs to determine tests typically used to determine and verify savings. A summary of the responses is provided in the following table. 27 Financing Guidebook for Energy Efficiency Program Sponsors; December GDS Associates, Inc.

66 Table 5 1: Summary of Various HPwES Program Testing Procedures HPwES Program Test Procedures Note APS Blower Door Test Duct Test Pressure Pan Duct Blaster Visual Inspection For Collins Utilities Blower Door Test Pre and Post testing required. Home Free Nevada NYSERDA Xcel Energy Blower Door Test All BPI Tests Blower Door Test Draft Testing Ambient & Stack CO Test Visual Inspection Blower Door Test CO Test Infrared Tests All insulation must pass visual inspection. Infrared is performed when appropriate for the climate. No longer requires all comprehensive tests to be done because they have found data suggesting that participants are not willing to pay for such tests. However, even though the number of required tests has decreased, Home Free Nevada feels that enough tests are still performed in order to obtain the necessary amount of information for each installation. Visual inspection of insulation and appliance installations. Blower door testing (test in and test out) to test for.15 NACH delta reduction, Uses iaudit Pro SnugHome software. Nevada Power Company Blower Door Test Optimizer software is used similar to RESNET. Rocky Mountain Power Questar Gas Company Utah Home Performance Non required Air Sealing Tests Visual Inspection Blower Door Test Duct Blast Visual Inspection A "just gotta do it" mentality is followed. Experience has shown that focusing on having the work done correctly is more important than emphasizing savings targets because savings are maximized only when the work is done correctly. Test as required by individual contractors are conducted. Random inspections of certain projects are also performed. All test conducted by third party. Tucson Electric Power Blower Door Test Duct Blaster Manual J Visual Inspection Originally used internal inspectors but recently migrated to a contractor model because customers complained of "too many visits." Enabling the contractor to perform both the inspection and installation has facilitated a more seamless experience to customers and has also fallen in line with program s vision of having "knowledge embedded to contractors." GDS conducted a survey of various HPwES Program managers to determine if Manual J tests are utilized for determining proper HVAC equipment for efficiency improvements. Out of the nine applicable programs surveyed, three require Manual J calculations and two require a similar test or simulation as part of the HVAC analysis. A summary of all responses are provided in the following table. 61 GDS Associates, Inc.

67 Table 5 2: Summary of Various HPwES Program HVAC Analysis Requirements HPwES Program HVAC Analysis Note APS Manual J Performs Manual J tests as part of quality assurance. Do not performance Manual D Tests. Home Free Nevada NYSERDA NV Test Manual J A Manual J is not performed. Instead, uses a tool within its Optimizer software that performs a test that is similar to the Manual J. When the results of the Manual J are compared with Optimizer's version of the test, there is usually no more than a 2% difference. Not directly required by NYSERDA; however, Manual J testing is required for BPI heating certification. Utah Home Performance Simulation Manual J calculation simulated by OptiMiser. Tucson Electric Power Manual J Manual J is required. However, it is necessary to oversee the execution of the test as contractors have been known to create "templates" for the Manual J rather than perform the test each time. For example, contractors will reuse test results for 1 story houses, 2 story houses, and other types of categories when completing the required paperwork. Based on national program recommendations and survey results, GDS recommends that Austin Energy require the following tests pre and post measure installation as part of the HPwES Program protocols: Visual home inspection; Blower Door Test to measure air leakage; Duct Blaster Test to measure duct leakage; Manual J calculations for HVAC equipment sizing; and Infrared test with an infrared camera to determine hot/cold spots and air movement through walls. These tests enhance the initial energy assessment, lead to more sound efficiency equipment recommendations, and provide verification that measures were implemented correctly and are generating savings for the participant Contractor Network The HPwES Program is a contractor driven program. According to program staff the program is implemented through our contractors. Participating contractors are listed on the Austin Energy website, allowing customers to search for and select a contractor that they feel comfortable with to provide the services. The contractor then visits the home to do verification. Austin Energy works closely with the contractors during the process to help ensure that each job is successfully completed. This includes going out with its inspectors and with contractors at verification, and then coming back after the project is complete to make sure that all scheduled work was successfully implemented before Austin Energy signs off on the rebate or loan. All participating program contractors are required to do a minimum of four jobs 62 GDS Associates, Inc.

68 every six months. While contractors drive the program, Austin Energy s relationship with the program contractors is viewed as a critical reason for the program s success Recruitment Austin Energy currently has an extensive contractor network for the HPwES Program; recruitment does not appear to be a problem. GDS recommends that Austin Energy instead focus on contractor training to ensure that existing partners are well educated and up to date on energy efficiency weatherization practices, building standards and best practices, and HPwES Program goals and requirements. More information on contractor training is provided in Section Requirements The HPwES Sponsor Guide requires the following of participating contractors: Job Requirements: For every HPwES job, the contractor must report the job following program administrator procedures and reporting requirements and must provide the homeowner with a professional report. Field Inspections: The contractor must allow random field inspections by the program sponsor or its designee. At the request of the sponsor, the contractor must make reasonable repairs or correction to work that the contractor has performed to bring work up to program standards at no additional cost of the program participant. Austin Energy meets these contractor guidelines and also has what they described as a 20% value rule which means that if a participating contractor fails 20% of their jobs within a sixmonth period they will be pulled from the active list. If a pulled contractor is interested in continuing with the program, Austin Energy will work with them to come up to speed. GDS supports this value rule and recommends that Austin Energy continue to evaluate participating contractors according to these metrics Certifications & Training Contractor training is also another aspect of the program that was identified by program staff during the interviews as both a strength and an area for improvement. The whole house approach requires new types of home performance training for contractors and continuous training opportunities for new contractor employees. GDS suggests areas for additional and continued training include blower door testing, Manual D, Manual J, air balancing, and performing whole home assessments that go beyond the traditional energy audit. GDS understands that the training process and certain aspects of the training (e.g., orientation and the contractor handbook) are viewed as successful. However, new types of training will be needed as the program continues to expand its whole house approach. 63 GDS Associates, Inc.

69 According to the HPwES Sponsor Guide all participating contractors shall maintain at least one staff member who is certified at the Building Performance Institute (BPI), RESNET or the equivalent. Participating contractors are also required to ensure that certified technicians receive, at a minimum, training that is in compliance with BPI/RESNET/OTHER continued education requirements. Additionally, while working on HPwES jobs energy audits, installation measures, post inspections participating contractors shall comply with all certification standards governing home performance inspections, diagnostics and treatments. The HPwES Sponsor Guide also recommends that program administrators offer regular training which should include: Description of HPwES Program, Tips for answering HPwES Program questions, and Information on the economical and environmental benefits of energy efficiency. GDS conducted a survey of various HPwES Program managers to determine what types of certifications are typical for participating contractors. Table 5 3: Summary of Various HPwES Program Contractor Requirements HPwES Program APS For Collins Utilities Home Free Nevada NYSERDA Xcel Energy Nevada Power Company Rocky Mountain Power Questar Gas Company Utah Home Performance Tucson Electric Power Contractor Requirements BPI Yes BPI BPI BPI or NATE BPI or RESNET Non Specified Questar and BPI No BPI Note Requires contractors to be licensed, have a BPI certification for every auditor employed by the contractor, maintain enrollment in the mentorship program, and pass a prescreening test. Also, requires contractors to take an Energy modeling & software training course. Partnership with Lightly Treading and Energy Logic with more rigorous requirements than any other HPwES Programs. A mentorship program is also in place. Required to have BPI certification. RESNET certification used to be required as well, but determined that requiring both BPI and RESNET certification was too restrictive and eliminated too many potential contractors. Contractors must also meet insurance requirements and present valid business licenses. BPI or NATE (e.g., for AC) depending on expertise. Requires CAZ training as a "band aid" for any training that may not include all concepts covered in CAZ. Currently restructuring the way it deals with contractors. At the moment contractors are required to provide references for accreditations and must complete basic training through the utility. The technical requirements for contractors are set by the Regional Technical Forum, a division of the Northwest Power Planning Conservation Console. The new system will require strict testing to enter RMP's network and will allow a limited number of project failures before contractors are dropped from the network. Weatherization contractors are required to complete training directly through Questar gas. Air sealing contractors are required to be BPI certified. All contractors must have prior experience in the industry. At least one person in the installation crew visiting a household must be BPI certified. The contractor must also be registered with the Registrar of Contractors. 64 GDS Associates, Inc.

70 The predominant certifications required by HPwES Programs are BPI and RESNET. A summary of audit requirements under each type certification is presented in the following table. Table 5 4: Audit Requirements RESNET versus BPI 28 Area RESNET BPI Outside Evaluation Required to properly model & rate a home (e.g., model nos. on air handlers, window size, footings, walls, rim joist areas, etc.). Required for heat loss & savings calculation to be w/in 10% of actual. Building Orientation Required to actually measure & rate building. Not mentioned or required Type & Color of Materials Required to actually measure & rate building. Not mentioned or required Shading of Exterior Windows Required to actually measure & rate building. Not mentioned or required CO Outdoors Not required. Required to get baseline number and zero it out for indoor monitoring. Check Gas Line & Meter for Leaks Not required. Required to be checked, including gas lines in the house. Attic Wall Insulation Crawl Space, Basement, Rim Joist Windows Required to measure & rate installation & note problem areas. Required to measure & rate installation & note problem areas. Required to measure & rate installation & note problem areas. Required to measure & rate installation & note problem areas. Required for heat loss & savings calculation to be w/in 10% of actual. Required for heat loss & savings calculation to be w/in 10% of actual. Required for heat loss & savings calculation to be w/in 10% of actual. Required for heat loss & savings calculation to be w/in 10% of actual. Lights & Appliances Type of appliance & percent CFLs to perform calculations. Nothing listed in the Standards for audits. Blower Door Test Required & similar. Required & similar. Duct Leakage Required use of blower door & duct blaster testing for accurate numbers. Not required under Building Analyst mentioned in Envelop section, but allow for use of pressure pans and guesstimating. Given that the majority of programs reviewed required BPI certification for partnering contractors, GDS recommends that Austin Energy use the BPI certification and guidelines as well for its partner network. 28 RESNET & BPI the Pro s & Con s. Weblog entry. SLS Construction: The HTRC: Homeowner s & Trades Resource Center. Posted September 23, Date accessed June 15, 2012 ( construction.com/2010/resnet bpi pros and cons). 65 GDS Associates, Inc.

71 Regular (e.g., monthly or quarterly) trainings are also helpful in developing a superior home performance workforce. As part of the test in/test out procedures for the initial home assessment and final inspection (see Section 5.2.2), GDS has recommended several tests that are not currently part of the BPI requirements. GDS recommends Austin Energy offer monthly trainings to review program requirements, testing procedures, etc. and that qualify for CEUs to the network of participating contractors, possibly in conjunction with existing or newly formed local or regional associations of home energy auditors and home performance contractors. GDS also recommends educating contractors so that there is a better understanding of HVAC commissioning; this has been identified as an area needing improvement in the program. The missing elements of this program (as well as many other existing home energy efficiency programs) is the proper training of home performance contractors to the correct sizing of HVAC equipment and distribution systems (ductwork). In new construction, which is the minimal energy codes and for ENERGY STAR Homes, right sizing has been a focus. However, in existing home programs, it is not often addressed and not often highlighted as an area in which the implementation contractors are well versed. Requiring an element of training that focuses contractor s attention on the Air Conditioning Contractors of America s (ACCA) series of manuals that address right sizing will help develop a more educated and highly trained home performance workforce in the Austin area Quality Assurance Austin Energy already has some quality assurance measures in place. For example Austin Energy s HPwES Program includes the following: Review of all applications by Austin Energy staff to verify eligibility and applicability of recommended measures. Independent third party inspection to verify the installation and quality of all measures implemented before rebates are issued. Review of final inspection reports by Austin Energy staff for completeness before issuing rebates. Austin Energy also has what they described as a 20% value rule which means that if a participating contractor fails 20% of their jobs within a six month period they will be pulled from the active list. If a pulled contractor is interested in continuing with the program, Austin Energy will work with them to come up to speed. GDS commends Austin Energy for their current quality assurance practices; however, based on a review of other programs there are a few ways in which Austin Energy could enhance the quality of HPwES projects. 66 GDS Associates, Inc.

72 The following activities are considered best practices for quality assurance purposes: Austin Energy should continue to require third party verification of installations and quality of work for 100% of HPwES Program projects. Austin Energy should require, as part of the final third party inspections, test outs for all tests conducted in initial home assessment. Post testing is important due to the inconsistent quality of installation and infrequent retro commissioning of equipment can increase space conditioning costs by 20% to 30%. Experts estimate that contractors install some 90% of HVAC equipment and insulation sub optimally, reducing efficiency by 20 30%. Austin Energy should continue to enforce the 20% value rule. This incents contractors to continue to perform quality work if they wish to continue as HPwES Program partners. Austin Energy staff should select 15 20%% of all projects to receive a field quality insurance inspection. Projects should be selected on a random basis and at the request of the homeowner. Contractors should not inhibit or discourage homeowners from participating in the program quality assurance practices and such activity could result in disciplinary action. 67 GDS Associates, Inc.

73 5.2.5 Recommendations A summary of GDS recommends pertaining to program operation and delivery are provided in the following table. Table 5 5: Summary of Program Operation and Delivery Recommendations Category Section Recommendation Program Operation Home Performance Protocols Contractor Recruitment Contractor Requirements Contractor Certifications and Training Quality Assurance Section Section Section Section Section Section Coordination and Communication Commended for meeting HPwES Operation Requirements. Support current efforts to streamline program and troubleshoot Power Saver system. Recommend performing the following tests during initial assessment and final audit: visual inspection, blower door test, duct blaster test, Manual J calculations, and infrared testing. Recommend focusing on training existing contractor network to improve quality of work. Commended for meeting current contractor guidelines. Support current practice of 20% value rule. Support the practice of BPI certification for all contractors and regular training session. Continue to require third party verification of all completed projects; recommend requiring that test outs be performed for all tests conducted during initial assessment. Continue to enforce the 20% value rule for contractor quality. Recommend that Austin Energy staff randomly visit 15 20% of projects to quality assurance reviews Findings Program coordination activities include a partnership that Austin Energy currently fosters with Texas Gas to provide additional incentives for measures such as duct sealing/replacement or gas furnaces, and promotion of manufacturer s rebates on appliances. Austin Energy is also part of the large public power council comprised of the 25 largest municipally owned utilities. Together these utilities are working on a big box store initiative that will go further upstream to offer rebates at the store level to consumers at the point of purchase. Internal program communications include a weekly newsletter that goes out to the Austin Energy staff announcing events, trainings and new program information, and monthly staff meetings. Austin Energy is also currently working on a calendar to map out trainings, and 68 GDS Associates, Inc.

74 implementing a multi departmental Demand Side Management (DSM) working group to help foster communications and cooperation throughout the organization. External communications include contractor education and training, a newsletter for contractors to keep them abreast of all the program news. Austin Energy staff also communicates with program contractors regarding potential program changes to solicit their input, and is developing a website for contractors Recommendations GDS recommends that Austin Energy continue to follow through with the changes indicated. It is important to maintain regular communication throughout the agency so that all involved either integrally or peripherally are up to speed on the program s design, changes, successes and shortcomings. Dealing with a bureaucratic organization can sometimes slow decision making on issues such as if Austin Energy should release consumption information that contractors and evaluators need to determine savings and success. GDS recommends that Austin Energy work on internal communications through the establishment of regular meetings and/or regular s to report program success, shortcomings, improvements, design changes, needs, etc. Keeping the team informed can reduce the time it takes to implement program change because the groundwork or basis for change has already been laid. It is also important to consider who should be informed and what information should be disseminated on a regular basis. For example, employees fielding customer questions should be kept up to date on program design and implementation improvements while program management should be kept informed of program expenditures, participation levels, and savings. Additionally, it was noted in interviews that program management feels that two additional technical staff is needed for field work and to help educate and conduct training. Considering the objectives of the program and recommended improvements, GDS agrees that additional staff would enhance the program by providing more manpower to ensure the quality of the program. 5.4 Marketing and Customer Education An evaluation of Austin Energy current marketing strategies for the HPwES Program was not part of the initial RFP. (See Task 3: Evaluation of Austin Energy s HPwES Program elements/processes, NOT including program marketing and outreach campaigns, contractor assignments and role of third party for scope of work assignments and inspection duties.) However, as part of GDS s review of other HPwES Programs and best practices reports, GDS made several findings which are presented in this section. 69 GDS Associates, Inc.

75 5.4.1 Findings Marketing and customer education efforts include mailings, internet marketing and, customer outreach including presentations that Austin Energy gives to local businesses, clubs and associations. Materials utilized by Austin Energy include PowerPoint presentations, program collateral material and giveaways. The customer education component is focused on increasing the understanding of what a whole house approach really means. The contractors also are expected to play a big role in the education of Austin Energy s customers with regard to the program features and benefits. The HPwES Program marketing strategy includes the following key elements: Utilizing program contractors to get the word out; Customer word of mouth; The Austin Energy website; Internet advertising campaign; Mailers; Bill stuffers; Use of program collateral material and giveaways; and Outreach such as community events and presentations to business groups, associations, clubs, etc. The internet advertising campaign, which was recently launched, is designed to direct Austin Energy s customers back to the Austin Energy website and HPwES Program information through search engines such as Google Recommendations It is vital to understand barriers to adoption of energy efficiency measures as well as barriers to participation in the program. The primary driver for some home owners is to improve the health, comfort, and safety of their residence. It is important to note that the home owner s attitude toward energy efficiency is not always energy savings; it can be indirectly affected by the current economic climate, home owner preferences, and home owner income levels. Thus, it is important to emphasize the non energy benefits of HPwES improvements when marketing and advertising the program, because some homeowners may not be aware that a whole house assessment can uncover performance issues in the home that directly affects the energy usage in the home. Several strategies exist to increase consumer awareness. One innovative strategy to increase awareness and demonstrate the benefits of the whole house approach to energy efficiency is a Home Energy Makeover Contest. The home, chosen for its inefficiency, produces dramatic energy savings and works as a good marketing promotion. 70 GDS Associates, Inc.

76 More information on barriers to participation and ways to overcome barriers through marketing efforts are explored in the following section. 5.5 Participation and Barriers to Participation The number of customers that the program has served, even in a down economy is commendable. During the 2011 fiscal year, rebates reached 95% of Austin Energy s HPwES Program goal while the loans exceed the goal. This section contains an analysis of Austin Energy s current participation barriers and offers recommendations for overcoming such barriers to increase participation going forward Findings There were several participation barriers identified during the survey process and in the Energy Efficiency Focus Group Report prepared for Austin Energy by DHM Research 29 : These barriers included: Lack of Money: Overwhelmingly, the most prevalent barrier identified by focus group participants to home energy upgrades was money. People said unless something broke, or there was an emergency requiring an immediate need, they could not afford to proactively make efficient upgrades to their homes. Skepticism Over Savings: Another barrier included skepticism over what some called true savings over time, wondering if their initial short term investment would pay long term dividends regarding overall energy costs. Hassle: Other focus group participants noted improvements and changes would be too much work or hassle to manage if they didn t have to, or were not required to. Lack of Understanding: A small minority said they simply didn t understand the meaning of some improvements or how certain improvements could directly connect to saving energy. They said they could benefit from a list explaining what various improvements meant, and how those improvements could concretely reduce inefficiencies over time. Not a Necessity: There was also a general sense of necessary prioritization of what participants required simply to survive economically over what they considered fancy or luxuries. Newer energy saving appliances were not perceived by some as a goal or aspiration, but rather the equivalent of the shiny Cadillac down the street they ll never own. Cumbersome Forms: There are some forms that Austin Energy is trying to work out electronically that are currently a barrier. Writable PDFs or different permission forms are needed to overcome these barriers. 29 DHM Research, AUSTIN ENERGY, Energy Efficiency Survey Work, October 2011, pg GDS Associates, Inc.

77 5.5.2 Recommendations The noted barriers to participation in Austin Energy s HPwES Program are typical for this type of program and are the same issues that many other administrators are up against. GDS has provided a recommendation below for each of the barriers identified. Lack of Money: Money barriers can be overcome through attractive loan or rebate offers. For recommendations on appropriate incentive levels for HPwES Programs, please refer to Section Skepticism over Savings: Thorough audits can help to alleviate some of the skepticism associated with energy savings. Another strategy is to incorporate other benefits such as health and comfort into the marketing messages. This claim is substantiated by the National Evaluation of HPwES Programs that has found that "both sponsors and contractors alike find that homeowners are oftentimes more motivated to respond to [health and safety] issues than they are to energy efficiency issues. Hassle: One way to mitigate the hassle of participation is to make participation as easy as possible on the customer by having contractors perform both the audit and installation in order to offer a seamless and convenient sale to the consumer. By packaging incentives, minimizing paperwork, and pre approving contractors, customers have "fewer reasons to decide against home improvements. 30 Lack of Understanding: It is recommended that significant resources and creativity need to go into promoting home energy improvements to increase participation rates. 31 This lack of understanding goes hand in hand with skepticism over savings. It is important to have a clear and concise marketing message that draws in customers in a relatable way. For example, Seattle City Light has run a successful ductless heater campaign with the slogan: The 70s called and they want their heater back. The slogan caught customers attention and the website describing the program was interactive and informative explaining the benefits of upgrading heating systems. This type of campaign makes learning about energy efficiency exciting and relatable. In addition to informative marketing materials, it is important that all participating contractors are well educated in the program design and energy efficiency measures. Once a customer indicates interest in the program, it is up to the contractors to sell the improvements. For more information on contractor training, please refer to Section Not a Necessity: Again, the key is to market the program in a way that makes participation attractive to the customers needs. Translating efficiency improvements to 30 Driving Demand for Home Energy Improvements. Prepared by the Environmental Energy Technologies Division of Lawrence Berkeley National Laboratory; September Driving Demand for Home Energy Improvements. Prepared by the Environmental Energy Technologies Division of Lawrence Berkeley National Laboratory; September GDS Associates, Inc.

78 understandable concepts such as dollars saved, personal comfort, family health, etc. are ways to make energy efficiency relatable. Cumbersome Forms: As indicated in the findings, Austin Energy is already working to simplify the application process for participation in the HPwES Program. GDS supports this efforts as the more cumbersome the application process, the more deterred customers are from following through. However, there should be balance between simplifying forms and ensuring that the necessary data for measuring and evaluating program success is collected. For more information on recommendations for data tracking and reporting, please refer to Section Customer Decision Making and Program Influence Findings While the marketing approach is comprehensive and multi faceted, one issue that was uncovered during the program staff interviews is the inability of Austin Energy to track the effectiveness of individual aspects of the marketing plan. For example, if a customer calls in or contacts a contractor to inquire about the program, they are not asked how they heard about the program. According to program staff, there are also no customer surveys conducted by Austin Energy to determine the success rate of the various elements of the program marketing plan. This is a rebate and loan program that is designed to influence customer decision making by targeting the financial barriers that prevent larger investments in whole house energy efficiency solutions. Yet, program participation barriers such as those addressed above in Section still exist. A HPwES Rebate covers up to 20% of the cost of certain improvements up to $ $1,575, but this can still leave a significant investment for the customer to make. As currently structured, the program does not allow the customer to finance the required remaining investment with a HPwES Loan as the customer can apply for either a loan or a rebate, but not both. Other barriers such as skepticism over savings or not understanding the priority that should be given to energy efficiency investments can be addressed through better contractor training and focused marketing messages to address these concerns. The hassle factor relating to project management might be targeted by improving and/or promoting the turnkey aspect of the implementation process, while hassles associated with the customer s perceived perception that the application forms are cumbersome, are being addressed by Austin Energy Recommendations GDS recommends that Austin Energy enhance the HPwES Program marketing and educational materials to better address participation barriers and promote the program not only as an 73 GDS Associates, Inc.

79 opportunity for energy retrofits but as an opportunity to enhance the comfort and safety of a home while reducing energy costs. GDS also recommends that Austin Energy explore and integrated contractor approach where one contractor conducts the initial assessment and performs the measure installations to streamline the participation process form the customer perspective. Additionally Austin Energy should continue to streamline the application process through the Power Saver System. GDS also recommends exploring the incentive structure and incentive levels to attract participants and promote the program goal of achieving cost effective savings. More information on incentives is provided in the following section. 5.7 Incentive Structure According to the National HPwES Program Sponsor Guide, the following is recommended in terms of establishing an incentive structure and/or financing plan for HPwES Programs. Award incentives for the successful completion of a project implemented by a participating contractor. Increase the amounts such that comprehensive improvements are encouraged. Offer incentives to both participating contractors and the homeowners. Additionally the national HPwES Program recommends offering both low interest loans and rebates. Research has shown that customers will select one incentive option over the other based on their financial situation. Homeowners with cash on hand or access to cheap funds on their own are more inclined to take a cash rebate. Homeowners with less available cash or no available equity tend to opt for the low interest loans through program sponsors Findings Austin Energy provides incentives, in the form of rebates and loans, to residential customers making energy efficiency improvements under the national HPwES Program. The efficiency improvements eligible under Austin Energy s HPwES Program include improvements to attic insulation, air infiltration reduction, solar screen, radiant barriers, window replacements, duct repair, duct sealing, and high efficiency heating and cooling systems. A variety of rebates and loan options are offered, including bonuses for completing all recommended conservation measures. A HPwES Rebate covers up to 20% of the cost of certain improvements or a maximum of $1,575 per home. HPwES Loan offers two options for financing home energy improvements: Option 1 with interest as low as 0% if all recommended improvements plus an energyefficient air conditioner change out are completed by one of Austin Energy s participating contractors. 74 GDS Associates, Inc.

80 Option 2 for a menu of improvements selected by the homeowner, with interest as low as 1.9%. Based on the HPwES sponsor guidelines GDS notes the following: Austin Energy already awards incentives to only those projects that are successfully completed by participating contractors. GDS recommends that Austin Energy reevaluate the existing HPwES incentive structure. Austin Energy already has an established contractor network and thus does not need to offer monetary rewards for participation (e.g. contractors are already willing to participate, therefore AE does not need to pay contractors for homes they audit and improve). Both program staff interview participants indicated that an increase in incentives should be considered. This is backed up by recent survey and focus group research conducted by Austin Energy which concluded that: Customers show higher interest in rebates than in low interest loans 32. o Almost three fourths of customers are motivated by rebates to make energy efficiency improvements, with three in 10 who said it gives them a great deal of motivation. o However, rebates were the primary motivator for one quarter or less of customers who have made energy efficiency improvements to their home. o While the interest in rebates may be high, actual behavior shows rebates may be a secondary motivator with the primary being direct cost savings on their energy bill. o Just over one third (36%) of customers are motivated by low interest loans, but just as many say a loan would not motivate them at all. People are generally interested in learning more about the whole home energy program, but were skeptical of high interest rates and additional debt. o Customers wanted more easily digestible and accessible information on the program overall. o Most stated that an initial 0% rate would grab their attention or incent participation, more so than rebates or noncompetitive loan rates. Some participants preferred to avoid further debt at all costs. o Little interest was expressed in tackling a whole house redo project. Participants were more interested in individual projects over time 32 DHM Research, AUSTIN ENERGY, Energy Efficiency Survey Work, October 2011, pg GDS Associates, Inc.

81 While the above research findings indicate that there is certainly a high interest in rebates, it is not clear how increasing rebates will impact customer participation. Very low or zero interest loans may incent participation more than rebates, but the DHM study 33 did not specify a specific interest rate. If future focus groups are planned it is recommended that a range of interest rates be tested. Clearly there are tipping points where very large rebates as a percent of the total required investment will create significant customer interest, but at a significant cost to Austin Energy and its customers. GDS reviewed the incentive levels of the following program: Arizona Home Performance Program (AZ) City of Fort Collins, Colorado Home Efficiency Program (FCU) Nevada Energy (NV) New York State Energy Research and Development Authority Home Performance with Energy Star Program (NYSERDA) Xcel Energy Home Performance with Energy Star Program (Xcel), and Rocky Mountain Power Residential Programs (RMP). The range of rebate levels for measures rebated under these programs is presented in the following table. 33 DHM Research, Austin Energy, Energy Efficiency Survey Work, October 2011, pg GDS Associates, Inc.

82 Table 5 6: Incentive Levels for Various Home Improvement Programs and Measures Measure Austin Energy AZ FCU NV NYSERDA Xcel Energy RMP Home Audit/Assessment $75 $200 Whole Home 20% Energy Savings $1,000 Air Sealing 25% Reduction $250 $300 10% Air Sealing 33% Reduction $250 $400 10% Air Sealing 50% Reduction $250 $500 10% Insulation Spray Foam $250 $0.75/s.f. $750 10% $0.45/s.f. Insulation Foam Board $0.0035/s.f. x R value + $45 $250 $0.75/s.f. $450 10% Duct Performance Testing $200/system + $50/return Ductwork Replacement $1.75/l.f. Ductwork Sealing $0.12/s.f. $250 Ductwork Insulating $1.25/l.f. 10% Ductwork Sealing & Insulating $200 $300 Ductwork Distribution Improvements 10% Radiant Barrier $0.10/s.f. Window/Door Replacement $1/s.f. $3.75/s.f. $1,000 10% $0.50/s.f. Window/Door Storm 10% Shade Screens $1/s.f. $250 Window Film $1/s.f. $1.50/s.f. $300 External Combustion Air $20 per Replace Air Handler Blower Motor $150 Whole House Fan $250 10% Evaporative Cooler $500 Mechanical Ventilation 20% $400 Cooling Improvements AC, Controls, Duct Repair, etc. $1,000 HVAC System Improvements 10% HVAC Tune Up $75 Programmable Thermostat 10% $25 AC New Installation SEER 14 $250 AC New Installation SEER 14.5 $300 AC New Installation SEER 15 $350 $400 AC New Installation SEER 16 $550 AC Replace SEER 14 $270 $450 10% $250 $550 AC Replace SEER 15 $350 $270 $550 10% $250 $550 AC Replace SEER 16 $ GDS Associates, Inc.

83 78 GDS Associates, Inc. Austin Energy HPwES Evaluation Report 2012 Measure Austin Energy AZ FCU NV NYSERDA Xcel Energy RMP AC Replace SEER 17 $550 HP New Installation Electric $500 $550 HP Replace SEER 15 $400 $500 $550 HP Replace SEER 16 $500 $500 $550 HP Replace SEER 17 $600 $500 $550 HP New Installation Air Source $500 10% HP New Installation Ground Source $500 10% $300/ton $1,500 Electric Furnace Replace $500 10% $200 Electric Furnace Replace 0.92 AFUE $500 10% $170 Electric Furnace Replace 0.94 AFUE $500 10% $200 Boiler Replace 10% Boiler Replace 85% AFUE 10% $160 Wood/Solid Fuel Pellet Stove Replace 10% Heat/Energy Recovery Ventilator 10% Evaporative Cooling Replacement Standard $1,000 $125 Evaporative Cooling Replacement Premium $1,000 $525 Evaporative Cooling New Standard $1,000 $275 Evaporative Cooling New Premium $1,000 $625 Evaporative Cooling Whole House System $1,000 $1,000 Water Heater System Improvements 10% Water Heater Replace High Efficiency 10% $50 Water Heater Replace Tankless $200 Water Heater Replace Indirect Fired Tank 10% Water Heater Replace Power Vented $100 Water Heater Replace Solar/Thermal 10% Water Heater Tank Insulation 10% Faucet Aerator 10% Low Flow Showerhead 10% CFL Bulbs 10% Special Pricing CFL Fixtures 10% $20 LED Bulbs 10% Ceiling Fans $20 Refrigerator Recycling $30 $50 10% Refrigerator ENERGY STAR 10% $20 $15 Clothes Washer ENERGY STAR 10% $75 $15 Dishwasher ENERGY STAR 10% $20 $15

84 Measure Austin Energy AZ FCU NV NYSERDA Xcel Energy RMP Humidifier ENERGY STAR 10% Freezer ENERGY STAR 10% Room Air Conditioner ENERGY STAR 10% $30 Oven Replacement Gas 10% Dryer Vent Repair 10% Gas Leak Repair 10% Pool Variable Speed Pump $200 $200 Seasonal Pool Timer $75 Health & Safety Smoke/Radon/CO Detectors 10% 79 GDS Associates, Inc.

85 GDS also conducted a survey of HPwES Program managers to determine how other organization set rebate structures. A summary of the findings is provided in the following table. 34 Out of ten organizations surveyed, three have performance based targets. Table 5 7: Summary of Various HPwES Program Rebate Structures HPwES Program Performance vs. Prescriptive Note APS Prescriptive In the process of migrating towards a performance based program. For Collins Utilities Prescriptive Home Free Nevada Performance Target of 20% savings; target was initially 15% until recently. NYSERDA Prescriptive Xcel Energy Prescriptive Rebate based on incremental cost. Nevada Power Company Performance Performance based on savings targets over 20%. Rocky Mountain Power Questar Gas Company Prescriptive Prescriptive Utah Home Performance Prescriptive Pays a non variable 50% of job cost as long as minimum 20% savings is achieved. Tucson Electric Power Performance Originally a prescriptive program, however it became apparent that contractors were not meeting performance requirements Recommendations Based on the assessment of eligible measures and incentive levels, it is clear that Austin Energy lacks the diversity of other programs eligible measures. GDS recommends Austin Energy consider offering more measures at reduced rebate levels as a way to appeal to more customers and as a way to obtain more cost effective energy savings. Additionally, Austin Energy has many tiered rebate levels where other programs offer a flat rebate for a particular type of efficiency improvement. Offering a flat rebate either a specific dollar amount or percent of cost the rebates appear less confusing to the customer. GDS recommends Austin Energy consider adopting this type of rebate structure. The final rebate structure should be based on the program s goals. For example, if the goal is to reach the maximum number of customers, Austin Energy should consider the previous recommendation. However, if Austin Energy determines that a more suitable program goal is to maximize savings for each participant, a more compelling incentive structure may be to set rebates levels according to savings potential and/or achievement (i.e., a performance based incentive structure). For example, Austin Energy could provide incentives, up to a certain percent of job costs, for homes reaching annual energy savings targets. Additionally, additional rebates could be provided to those reaching annual savings above and beyond the program target (e.g., projects with 30% annual savings could be eligible for additional rebates). As indicated in Table 5 7, although not currently the dominate incentive structure, the HPwES 34 A summary of the HPwES Program Adiminstrator surveys is provided in Appendix C. 80 GDS Associates, Inc.

86 Programs appear to be evolving to a more performance based incentive structure. GDS also recommends that Austin Energy considering offering low interest loans in combination with the rebate for larger investments. 5.8 Database and Tracking Systems Findings Program data is entered into the Power Saver Program. This includes test results, rebate and loan amounts, the quantity, type and cost of retrofit measures, the characteristics of the home, and all information on the rebate sheet that can be found on the Austin Energy website. The Power Saver Program replaced an existing Oracle based Austin Energy data system. Power Saver is a new automated system that is designed to handle all facets of the program process from scheduling energy analysis through the final inspection process. It allows the program staff to access information that is needed in the field or in the office to track and manage the program. Power Saver can also track program participation and contractor payments and calculate program savings. Data collected by the contractors to be entered in the Power Saver Program includes basic housing information such as square footage, the type of home, specific measures that qualify for rebates, account number, air test reports, and the rebate amounts. One concern that was raised by program staff with the data tracking and reporting process is the approach that is used to estimate household consumption and program savings. Deemed savings values are currently used to calculate savings. A more job specific approach that models savings based on housing and equipment characteristics would be more accurate, but also more expensive. The value of this additional accuracy could be determined by using a building simulation tool on a sample of participant homes and comparing the results to the deemed savings values. For more information on evaluation and savings recommendations, please refer to Section Data is extracted into Excel spreadsheets by Austin Energy staff to do analyses that answer questions such as What s the average participant energy savings or installed cost per home? Power Saver also gives Austin Energy the ability to identify, geographically by zip code, where participants are located to assist with current and future targeting of program opportunities to meet Austin Energy s goals (e.g., reducing load on a substation or circuit to avoid future transmission and distribution (T&D) investments). Currently, Austin Energy does not include avoided T&D costs in its calculation of the cost effectiveness of DSM programs. Also of note is that Austin Energy does not include in its cost effectiveness analysis the value of water or nonelectric fuels savings associated with certain energy efficiency measures. 81 GDS Associates, Inc.

87 5.8.2 Recommendations GDS recommends that Austin Energy standardize their data tracking and reporting system for the HPwES Program. The records, as provided to GDS, are inconsistent and incomplete. There are inconsistencies in (a) the nomenclature used to indicate the types of measures installed in a home and (b) the type of baseline and efficient equipment data collected. These inconsistencies make it impossible to determine exactly what equipment was installed in a given home and to estimate the savings potential of that installation. The data files are also incomplete in that not every project contains all of the baseline, efficient equipment, and cost data. Depending on the type of evaluation plan Austin Energy decides to proceed with for future iterations of the HPwES Program, GDS recommends Austin Energy standardize their database and tracking system for the program to ensure that all of the necessary data is collected and that it is reported consistently for all projects. For more information on evaluation recommendations, please refer to Section Effective Methods for Achieving Maximum Participation and Savings The following sections contain findings and recommendations from the following: Task 6: Identify the most effective methods and measures for achieving maximum participation and efficiency rates, measurement and verification protocols, identification of energy efficiency technologies that might be introduced and that are not currently part of the program Best Practices for Home Performance with ENERGY STAR Programs GDS conducted a thorough review and assessment of HPwES Program best practices. Please refer to Section 6 for a summary of findings and recommendations. Here, GDS focused on the three HPwES Programs reviewed by the Home Performance Resource. A summary of their best practices findings are presented below. The reviewed programs are managed by the New York State Energy Research and Development Authority (NYSERDA), Austin Energy, and the New Jersey (NJ) Board of Public Utilities Office of Clean Energy, which contracts with Honeywell Utility Solutions. 82 GDS Associates, Inc.

88 Table 5 8: Summary of HPwES Best Practices Best Practice Provide easy and affordable pathways for homeowners to get involved with the program, with significantly higher benefits for deep whole house retrofits Leverage established brands (such as ENERGY STAR ) and existing utility customer relationships to enhance marketing and outreach efforts Coordinate with local businesses and training programs to expand the local contractor pool as demand for retrofit services grows Support industry growth and allow companies to form relationships with customers Involve local contractors at all stages of program design and implementation Stimulate industry capacity by offering subsidies for training, equipment and marketing Focus marketing, contractor recruitment and training based on Case Study NJ Austin Energy Austin Energy NYSERDA Austin Energy NJ NJ Austin Energy Practice Currently offer a Home Performance Bonus incentive for participants who implemented all efficiency recommendations. Currently the best practice. Currently the best practice. Currently supports growth through diversity of energy efficiency portfolio and extensive contractor network. Currently the best practice. Currently offers some training opportunities. Currently has an extensive contractor network and high GDS Recommendation Recommend examining an option for two program paths: a prescriptive option and a performance based option. The performance based option is preferred as it provides incentives proportional to actual savings. No changes recommended. Recommend focusing now improving the quality of the existing contractor network through certification requirements and on going training opportunities. No changes recommended. No changes recommended. Recommended focusing training opportunities to meet the needs of participating contractors. The needs can be determined based on program evaluation findings, contractor recommendations, new industry standards, program design changes, etc. Recommend updating program goals from participation levels to savings levels. This refocus will cause a ripple effect 83 GDS Associates, Inc.

89 an assessment of industry capacity and the existing customer base Encourage retrofits, not just audits, and support an integrated contractor model Work closely from the start with private sector participants and solicit their feedback regularly Plan for sufficient staffing and efficient administrative processes to avoid delays in payment Collect data, analyze and adjust Develop a system for third party verification and quality assurance NYSERDA NYSERDA NJ NYSERDA Austin Energy program participation. Currently encourages participation by offering rebates for installation of measures recommended through home audits. Currently no regularly established means of feedback. Currently program staff feels understaffed. Currently collect basic data. Currently identified as a best practice. of changes throughout the program (e.g., changes to target audience, contractor training requirements, incentive structures, etc.). Recommend implementing a performance based incentive structure to maximize savings potential. Also recommend an integrated contractor model (i.e., same contractor performance assessment and installation) to streamline the process for customers. Recommend conducting regular process evaluations to evaluate program best practice and areas for improvement. This should include surveys with participants, non participants, and program partners. Recommend the additional staff to support program and enhance program quality. Recommend standardizing data requirements for all projects so that meaningful evaluations can be conducted and savings can be accurately estimated. Recommend the continued use of a third party for project verification. Recommend conducting the same test at the completion of a project that were conducted during the initially assessment to verify the savings potential of installed measures. Austin Energy should also conduct field inspections on a random sample of projects. 84 GDS Associates, Inc.

90 5.9.2 Methods for Maximizing Program Participation and Energy Savings GDS has studied methods to maximize program participation and energy savings for over twenty years. Based on our energy efficiency program design, implementation and evaluation projects completed during this time period, we know that it is vital to understand barriers to adoption of energy efficiency measures as well as barriers to participation in the program by both customers and contractors alike. It is equally important to make it easy for contractors to assist with the implementation of the program as it is for customers to participate. In this section we highlight the most effective methods to maximize participation and energy savings based on the literature search we conducted for Task 5. Findings from this literature search can be found in Appendix D. The primary driver for some home owners is to improve the health, comfort, and safety of their residence. It is important to note that the home owner s attitude toward energy efficiency is not always about energy savings, it can be indirectly affected by the current economic climate, home owner preferences, and home owner income levels. It is important to emphasize the non energy benefits of HPwES improvements when marketing and advertising the program, because some homeowners may not be aware that a whole house assessment can uncover performance issues in the home that directly affect the energy usage in the home. Several strategies exist to increase consumer awareness; one innovative strategy to increase consumer awareness and demonstrate the benefits of the whole house approach to energy efficiency is a Home Energy Makeover Contest. The home, chosen for its inefficiency, produces dramatic energy savings and works as a good marketing promotion. The leading HPwES Programs have developed a variety of ways in which to recruit, reward, support, and recognize contractors. These activities include providing contractor incentives to encourage contractor training. The most successful programs have also realized the importance of devoting time and resources to recruiting appropriate contractors into the program, who have the necessary vision to be willing to invest in the HPwES concept, and may already be active in promoting energy efficiency. The most successful HPwES contractors are those that view this as a viable business opportunity and are experienced in selling premium efficiency or renewable technologies. Along with offering a six day diagnostic and remediation training session, which includes two days in the field, and post training one on one field mentoring to contractors, the California HPwES Program also offers a one day business and marketing session where contractors learn how to perform their own marketing and outreach to past and potential new customers. 85 GDS Associates, Inc.

91 While Austin Energy seems to have a well established base of contractors to support the HPwES Program research shows that supporting ongoing training assists participating contractors in making the most cost effective recommendations to customers (i.e., greatest savings per dollar spent) and to aid in helping contractors to effectively sell the improvements to customers. Maintaining a well trained workforce to assist in program implementation is common to all highly successful programs. Successful programs incorporate contractor recruiting strategies and marketing, support the contractors, and build customer awareness. Programs operating in Oregon, Vermont, Maine, New York, and New Jersey offer a variety of contractor marketing support. Some common strategies including offering co op marketing and contractor support, website support and tieins to EPA campaigns, media radio spots, print media ads, and internet keyword search. Some savvy HPwES contractors have learned to leverage these marketing activities to build their own contractor business. Contractors can provide customers with Energy Savings certificates after the project is completed as a way to further reinforce the energy efficiency message or piggyback their advertising with HPwES Program advertising. Contractors can also do targeted telemarketing in the neighborhoods where they are already performing home assessments and making home improvements. Along with training, contractors have the opportunity for mentoring, which provides contractors with direct experience performing diagnostic tests, making recommendations, developing a scope of work and installing improvements to best practice standards Evaluation, Measurement and Verification Methods Findings This section includes a summary of the M&V methods used by three other energy efficiency organizations implementing HPwES Programs. GDS also provides recommendations on impact evaluation procedures based upon the latest available protocols defined in the International Performance Measurement and Verification Protocols (IPMVP) handbook. A sample Evaluation, Measurement and Verification (EM&V) Plan for Austin Energy s HPwES Program is provided in Appendix B. NYSERDA 35 NYSERDA conducts M&V for the HPwES Program by conducting inspections on a random sample of participating households to determine if measures claimed to have been 35 The M&V information for NYSERDA was extracted from NYSERDA s July 29, 2009 Final Evaluation, Measurement and Verification Plan for NYSERDA s HPwES Program. 86 GDS Associates, Inc.

92 installed were actually installed (typically samples are selected at random to achieve a level of 90/10 confidence and precision). For the impact evaluation, NYSERDA uses a statistical billing analysis to determine program savings. Wisconsin Focus on Energy Similar to the approach used by NYSERDA, Focus on Energy conducts M&V for the HPwES Program by conducting inspections on a random sample of participating households to determine if measures claimed to have been installed were actually installed (typically samples are selected at random to achieve a level of 90/10 confidence and precision). Verification of installation is done in the form of a post installation audit by the same energy auditor who performed the initial energy audit. At this time the energy auditor conducts the applicable tests that were performed to collect the initial audit data following the installation of the ENERGY STAR qualified products. For the impact evaluation, Focus on Energy uses adjusted deemed savings values originally estimated for a 2005 potential study. The deemed savings values were developed using engineering heat loss calculations and are adjusted based on heating fuel types of participating homes. In a FY05 evaluation report 36, it was recommended that a statistical billing analysis be conducted to verify the savings estimates used to report savings for the HPwES Program in the future. A billing analysis was conducted for a 2008 pilot program Together We Save; however, these findings were not used to update the HPwES savings estimates as the program objective and measures installed were more aggressive than the Focus on Energy HPwES Program. New Jersey Clean Energy Program The NJ Clean Energy Program conducts M&V for the HPwES Program by conducting inspections on a random sample of participating households to determine if measures claimed to have been installed were actually installed(typically samples are selected at random to achieve a level of 90/10 confidence and precision). For the impact evaluation, the Clean Energy Program uses HomeCheck software to estimate energy savings for each participating household. The HomeCheck software was designed to streamline the delivery of energy efficiency programs. The software provides the energy efficiency specialist with an easy to use guide for data collection, site and HVAC testing protocols, eligible efficiency measures, and estimated energy savings. The software is designed to enable an auditor to collect information about customers sites and then, based on what the auditor finds through the audit, recommend energy saving measures and demonstrate the costs and savings associated with those recommendations. It also enables an auditor to track the delivery of services and installation of measures at a site. 36 Tom Talerico and Rick Winch, Glacier Consulting Group, LLC. Focus on Energy Evaluation: FY05 Savings Adjustments for Home Performance with ENERGY STAR Insulation Measures. July 14, GDS Associates, Inc.

93 This software is a part of an end to end solution for delivering high volume retrofit programs, covering administrative functions such as customer relationship management, inspection scheduling, sub contractor arranging, invoicing and reporting. The range of existing components of the site that can be assessed for potential upgrades is extensive and incorporates potential modifications to almost all energy using aspects of the home. The incorporation of building shell, equipment, distribution systems, lighting, appliances, diagnostic testing and indoor air quality represents a very broad and comprehensive ability to view the needs of a home. The software is designed to combine two approaches to assessing energy savings opportunities at the site. One is a measure specific energy loss calculation, identifying the change in use of BTU s achieved by modifying a component of the site. Second, is the correlation between energy savings from various building improvements, and existing energy use patterns at a site. The use of both calculated savings and the analysis of existing energy use patterns, when possible, provides the most accurate prescription of the impact of changes at the site for an existing customer considering improvements on a retrofit basis Recommendations GDS recommends Option C of the IPMVP for the method to use to determine overall program kwh savings. Option C estimates savings for a whole facility. GDS finds that the measures implemented under an HPwES Program affect all aspects of home energy use. Using Option C allows for assessing the interactive effects between various measures. The requirements for Option C include 24 months of continuous billing data (12 pre/12 post). Option C is recommended in cases where: The energy performance of the whole facility will be assessed, not just the ECM. There are many types of ECMs in one facility. The ECMs involve activities whose individual energy use is difficult to separate measures. The savings are large compared to the variance in baseline data. When Retrofit Isolation techniques are excessively complex. For example, when interactive effects or interactions between ECMs are substantial. Major future changes to the facility are not expected during the reporting period. A system of tracking static factors can be established to enable possible future nonroutine adjustments. Reasonable correlations can be found between energy use and other independent variables (e.g., heating & cooling degree days). 88 GDS Associates, Inc.

94 Based on our recommendation, a sample EM&V Plan has been provided for Austin Energy s HPwES Program in Appendix B Energy Efficiency Technologies to Consider The following table contains a summary of eligible measures for the Austin Energy, NYSERDA, NJ and WI HPwES Programs. GDS recommends that Austin Energy consider offering the measures eligible in the other best practice programs that are not currently part of Austin Energy s eligible measure list. Additionally, GDS analyzed several potential new measures as part of the impact evaluation. For more information please refer to Section 4 and for a list of measures recommended for consideration in future iterations of Austin Energy s HPwES Program, please refer to Section 7.1 of this report. Table 5 9: Summary of Eligible Measures in Best Practice Home Performance with ENERGY STAR Programs NJ Clean Energy Program 38 Wisconsin Focus on Energy 39 Measure Austin Energy NYSERDA 37 Insulation General x x x Insulation Attic x x x x Insulation Wall x Insulation Floor x x Insulation Foundation, x x GDS Recommendations Exterior Insulation Foundation, Interior x x Insulation Knee wall x Insulation Sidewall Cavity x Insulation Sill Box x Air Sealing x x x x x Caulking x x Weather Stripping x x 37 New York Home Performance with ENERGY STAR Program: Market Characterization and Market Assessment Evaluation. Prepared by Summit Blue Consulting, LLC for New York State Energy Research Development Authority, February New Jersey Home Performance with ENERGY STAR Eligible Measures (As of January 1, 2012). < >. 39 Wisconsin Focus on Energy Home Performance with ENERGY STAR Cash Back Reward Eligibility Summary for Work Completed January 1, 2012 to March 31, < ummary pdf>. 89 GDS Associates, Inc.

95 Austin Energy NYSERDA GDS Associates, Inc. NJ Clean Energy Program 38 Wisconsin Focus on Energy 39 Measure Exhaust Fan ENERGY STAR x Exhaust Fan Other x x Heat/Energy Recovery Ventilator HVAC Integrated w/fan Control & Mechanical Damper x x GDS Recommendations Windows x x Solar Screens/Awnings x x Radiant Barrier x Doors x Fuel Conversion x Heating Equipment x x x x Chimney Liner x Flue Closer x Cooling Equipment x x x x x Duct Repair/Replacement x x x x Water Heating Equipment x x x x x External Combustion Air x Appliances x Lighting x x Solar Electric x Solar Water Heating x Wind Electric x Structural Repairs x Sufficient Combustion Air and Prevent Combustion Appliance Zone, x Depressurization, Spillage or Inadequate Draft Vapor Barriers x Attic Ventilation x Fuel Line Leak Repairs x Clothes Dryer Venting x Exhaust Fan Venting x Smoke/CO Detectors x x Mold, Radon, Asbestos x x Other Health/Safety Improvements as Identified x

96 6 Review of Regional Home Performance Program, Customer Incentive Programs, Industry Studies and Other Research The following sections contain GDS s findings from the following task: Task 5: Conduct review of other utility HPwES and customer incentive programs, industry studies and other research to identify potential application to Austin Energy s HPwES Program. 6.1 Findings GDS reviewed the following programs and resources: Arizona s Home Performance with ENERGY STAR Program; Oncor s Home Performance with ENERGY STAR Program; AEP Public Service Company of Oklahoma Homer Performance with ENERGY STAR Program; The Building Performance Institute; Home Performance Resource Center; The New York Home Performance with ENERGY STAR Program; The New Jersey Home Performance with ENERGY STAR Program; Residential HVAC Quality Installation and Maintenance; Home Perspectives and Marketing; McKinsey Global Energy and Materials U.S. Energy Efficiency Report; and EPA Energy Management Guidelines and Benchmarking Best Practices. For a complete synopses of the programs reviewed, please see Appendix D. GDS also conducted a survey of program managers running HPwES Programs across the country. GDS received responses from the following programs: APS Energy Services HPwES Program; Fort Collins Utilities (FCU) Home Efficiency Program; Home Free Nevada; NYSERDA HPwES Program; Xcel Energy HPwES Program; Nevada Power Company Under Home Free Nevada (NPC); Rocky Mountain Power (RMP); Questar Gas Company Program; Utah Home Performance; and 91 GDS Associates, Inc.

97 Tucson Electric Power BrightSave Home Program. A summary of the survey responses is provided in Appendix C. A summary of GDS s findings is provided in the following table. 92 GDS Associates, Inc.

98 Table 6 1: Summary of HPwES Programs and Study Findings CATEGORY SUB CATEGORY DETAILS SOURCE Communication Internal Plan for sufficient staffing and efficient administrative processes to avoid delays in payment. HP Resource Center Contractors Auditors Inspectors must have a building analyst certification, participate in ongoing training, and have at least 2 years experience as a contractor APS Contractors Auditors BPI certified auditors. Home Free NV Contractors Auditors BPI certification required. NY HPwES Contractors Auditors Inspectors must complete QA/QC training. NPC Contractors Auditors Inspectors are 3rd party vendors who must meet the requirements of the Regional Technical Forum. Contractors Auditors Inspectors complete training through Questar. Questar RMP Contractors Auditors Inspectors are required to have either BPI or RESNET certification. UT HPwES Contractors Auditors Inspectors are also required to have BPI certification. Tucson Contractors Certifications BPI certified contractors. AEP Contractors Certifications Licensed with BPI certification for every, maintain enrollment in the mentorship program, and pass a prescreening test. Also, requires contractors to take an energy modeling & software training course. APS 93 GDS Associates, Inc.

99 CATEGORY SUB CATEGORY DETAILS SOURCE Contractors Certifications Partnership with Lightly Treading and Energy Logic for contractor certification and training. FCU Contractors Certifications BPI certified contractors. However, contractors must also meet insurance requirements and present valid business licenses. Home Free NV Contractors Certifications Most contractors generally specialize in a single construction procedure as opposed to whole building design. The growing HPwES Programs have helped to increase the BPI certified contractor base. McKinsey Study Contractors Certifications BPI certification required. NY HPwES Contractors Certifications BPI or NATE depending on expertise. Require CAZ training as a "bandaid" for any training that may not include all concepts covered in CAZ. Xcel Energy Contractors Certifications Contractors are required to have BPI or RESNET certification. NPC Contractors Certifications At the moment contractors are required to provide references for accreditations and must complete basic training through the utility. The technical requirements for contractors are set by the Regional Technical Forum, a division of the Northwest Power Planning Conservation Console. The new system will require strict testing to enter RMP's network and will allow a limited number of project failures before contractors are dropped from the network. RMP 94 GDS Associates, Inc.

100 CATEGORY SUB CATEGORY DETAILS SOURCE Contractors Certifications Weatherization contractors are required to complete training directly through Questar gas. Air sealing contractors are required to be BPI certified. All contractors must have prior experience in the industry. Questar Contractors Certifications Contractors who perform the work do not need any certification. UT HPwES Contractors Certifications At least one person in the installation crew visiting a household must be BPI certified. The contractor must also be registered with the Registrar of Contractors. Contractors Communication Provide dedicated program administrator for responding to contractor inquiries. Contractors Home Assessment Become contractor centric: contractors that are both auditors and installers enable the customer to experience a seamless and convenient sale. Tucson BPI Study APS Contractors Home Assessment One contractor performs both initial audit and measure installations. AZ HPwES Contractors Home Assessment Deciding whether to implement an Auditor, Contractor, or Hybrid model (Home Free Nevada still has not determined which model is the most effective). Contractors Home Assessment Encourage retrofits, not just audits, and support an integrated contractor model. Home Free NV HP Resource Center 95 GDS Associates, Inc.

101 CATEGORY SUB CATEGORY DETAILS SOURCE Contractors Home Assessment Enabling the contractor to perform both the inspection and installation has facilitated a more seamless experience to customers and has also fallen in line with TEP's vision of having "knowledge embedded to contractors." Tucson Contractors Recruiting Successful HPwES contractors are those that view this as a viable business opportunity and are experienced in selling premium efficiency or renewable technologies. Contractors Requirements After a year of participation, many of the subsidies are only available to companies who complete at least 10 jobs per year, which helps ensure that program funding is not being wasted. BPI Study NJ HPwES Contractors Training Stimulate industry capacity by offering subsidies for training, equipment and marketing Contractors Training Oncor provides technician training on proper installation practices for air conditioning and duct systems and small installer incentives are offered to offset additional labor and materials costs associated with a quality installation project. After a third party verification confirms that the installations meet program specifications, the homeowner receives a High Performance Installation certificate. HP Resource Center HVAC Quality Study Contractors Training Stimulate industry growth by offering various subsidies for training, equipment purchases and marketing. NJ HPwES 96 GDS Associates, Inc.

102 CATEGORY SUB CATEGORY DETAILS SOURCE Eligible Measures Eligible Measures Eligible Measures Eligible Measure Eligible Measure Eligible Measure Seal Air Leaks Add Insulation Seal & Insulate Ducts Duct Replacement HVAC Improvements Water Heater Upgrades Fix Combustion Equipment Solar Screens/Film Radiant Barrier Efficient Windows Lighting & Appliances Seal Ductwork Seal Air Leaks Repair/Add Insulation Shade Screens HVAC Improvements Lighting & Appliances According to the United States D.O.E, of the existing stock of refrigerators in U.S. homes, approximately 25 percent were manufactured before minimum efficiency standards took effect in Operating an appliance retirement and recycling program reduces energy consumption and peak demand and ensures that old models are not put back on the secondary market. AEP AZ HPwES EPA Review 97 GDS Associates, Inc.

103 CATEGORY SUB CATEGORY DETAILS SOURCE Eligible Measures Eligible Measures Eligible Measure Eligible Measure Seal Air Leaks Add Insulation Seal & Insulate Ducts HVAC Improvements Water Heater Upgrades Fix Combustion Equipment Solar Screens Efficient Windows Lighting & Appliances At least 3 measures must be implemented for participants to receive incentives (recently lowered from 5). Evaluations Energy Savings Deemed savings based on measurements. APS Oncor HPwES Xcel Energy Evaluations Evaluations Collect data, analyze and adjust. HP Resource Center Evaluations M&V Regularly conduct measurement and verification activities. APS Evaluations Savings Recently switched to Optimizer software and hires a 3rd party to verify performance measurements for 5% of participants. Evaluations Savings TREAT computer modeling software and Real Home auditor software is used to determine the energy savings. Savings are not verified. Home Free NV NY HPwES Evaluations Savings Deemed savings. Xcel Energy 98 GDS Associates, Inc.

104 CATEGORY SUB CATEGORY DETAILS SOURCE Evaluations Savings Energy savings are determined from calculations performed by vendors and 3rd party data. Savings are not verified. Evaluations Savings Deemed values. Questar Evaluations Savings TEP hires a 3rd party to determine actual savings. The method used by the 3rd party is called "Math Sheets," (i.e., a "really complicated spreadsheet"). The Math Sheets take into account measurements such as the duct leakage reductions verified by the blower door test, utility usage data, and the market pricing of measures to calculate avoided costs. RMP Tucson Home Assessment Home Assessment Cost Flat $99.00 fee for audit. AZ HPwES Recommended Improvements Homeowners feel less like they are being sold if they are told which measures should be done now and in combination with each other, and which measures can be done at a later date. Homeowner Perspectives & Marketing Home Assessment Tests Air Infiltration Tests Duct Blaster Tests Combustion Safety Tests AEP Public Service Co. of OK 99 GDS Associates, Inc.

105 CATEGORY SUB CATEGORY DETAILS SOURCE Home Assessment Tests Tests performed include the blower door test, duct test, pressure pan, and duct blaster. All insulation must pass a visual inspection and infrared is performed when appropriate for the climate. We test out everything. APS Home Assessment Tests Blower door testing. Pre and post measurements compared in order to determine the rebate received by consumer. FCU Home Assessment Tests Blower door test as well as all of the BPI tests. No longer requires all comprehensive tests to be done because they have found data suggesting that participants are not willing to pay for such tests. Home Free NV Home Assessment Tests Oncor states that their air conditioning equipment shall be properly sized to dwelling based on ASHRAE or ACCA Manual J standards. HVAC Quality Study Home Assessment Tests Testing performed includes blower door testing, draft testing, ambient and stack carbon monoxide testing, as well as a visual inspection of insulation and appliances. NY HPwES Home Assessment Tests Blower door testing (test in and test out). Tests for.15 NACH delta reduction, carbon monoxide levels, infrared. Uses iaudit Pro SnugHome software. Xcel Energy 100 GDS Associates, Inc.

106 CATEGORY SUB CATEGORY DETAILS SOURCE Home Assessment Tests Blower door testing is performed. Optimizer software is used similar to RESNET. NPC Home Assessment Tests No testing is performed (no test in or test out). A "just gotta do it" mentality is followed. RMP Home Assessment Tests Air sealing quality testing is performed as well as any other test required by the contractor. Questar Home Assessment Tests Required tests include the blower door test, duct blaster, and visual inspections. The testing is conducted by a 3rd party. UT HPwES Home Assessment Tests Required tests include the blower door test, duct blaster, Manual J and visual inspections. Enabling the contractor to perform both the inspection and installation has facilitated a more seamless experience to customers and has also fallen in line with TEP's vision of having "knowledge embedded to contractors." Tucson Incentives Levels Reimburses participants with 50% of the job cost up to $2000. UT HPwES 101 GDS Associates, Inc.

107 CATEGORY SUB CATEGORY DETAILS SOURCE Incentive Levels Based on the incremental cost to bring SOP to best practice, where the cost was not excessive to do so. For example we require air sealing and leakage test in/out on all insulation measures. We will not allow attic or crawl space insulation to be installed without the corresponding building assembly being air sealed first. We also estimated that to reduce the air leakage by 25%, 33% and 50%, it costs about what the corresponding incentives that we give ($200, 300 and 400). And we know what the leakage reduction actually is, with a minimum reduction of 10% required, but the incentives don t kick in until leakage is at 25%, 33%, and 50%. FCU Incentive Levels Matches the participant's investment. A 5 year loan with a 2.6% interest rate is also offered. The average cost of a project is $3300. Home Free NV Incentive Levels Based on income of participant. NY HPwES Incentive Levels 60% of incremental costs. Xcel Energy Incentive Levels Rebate of up to a $1000 for achieving 20% energy savings. NPC Incentive Levels Based on incremental cost and potential savings. Questar Incentive Levels Rebates up to $4,250 per home. AEP 102 GDS Associates, Inc.

108 CATEGORY SUB CATEGORY DETAILS SOURCE Incentive Levels a) Standard up to 20% of total cost per measure with max of $1,800 per home. b) Performance based on projected savings using modeling software (e.g., 20% savings = $1,500; 45% savings $4,000); incentives capped at 50% of total project costs. AEP Incentive Levels 87% of incremental cost, up to $250 per measure. Also offer loans up to $15,000 $20,000 at an interest rate of 3.99% (however, the IR is usually closer to 5%). Incentive Levels Prescriptive based on 75% of upgrade costs with maximum rebates up to $250 per measure type. Financing also available for qualifying homes. APS AZ HPwES Incentive Levels The results of tests, such as the blower door test and duct blaster test, determine the incentive paid to the participants. Incentives Structure New innovative financing can reduce capital restraints on homeowners by tying loan payments to the property or utility meter, instead of the homeowner, and by assuring the cash flow from the investment is always positive to the home owner. Capital burdens can be reduced by having monthly energy savings > than the loan payment or PAYS programs (Pay As You Save), which ties the loan to the home instead of the homeowner. Tucson McKinsey Study 103 GDS Associates, Inc.

109 CATEGORY SUB CATEGORY DETAILS SOURCE Incentive Structure Offers a "Zilch" Loan which is being phased out. Hoping to begin bill financing in July interest will be used to finance future loans. Loan goes against property, not against homeowner. Offers rebates as well. CFU Incentive Structure Prescriptive structure. FCU Incentive Structure Performance based on target of 20% energy savings. Home Free NV Incentive Structure Prescriptive based. A few different loan options are offered as well as a rebate program based on the income of the participant. NY HPwES Incentive Structure Xcel mainly offers rebates to customers (cash or check) for at least 3 improvements (recently lowered from 5). Also provides contractor air sealing installation incentive. Xcel Energy Incentive Structure 20% annual savings target. NPC Incentive Structure Prescriptive based; rebates only. RMP Incentive Structure Prescriptive based; rebates only. Questar Incentive Structure Performance based. Tucson Incentive Structure Two Paths: a) Standard b) Performance Incentive Structure Prescriptive structure. In process of migrating towards a performance based structure. AEP APS 104 GDS Associates, Inc.

110 CATEGORY SUB CATEGORY DETAILS SOURCE Incentive Structure Provide easy and affordable pathways for homeowners to get involved with the program, with significantly higher benefits for deep whole house retrofits HP Resource Center Incentive Structure Two low interest financing options: a) Energy $mart Loans offered through a network of third party lenders, or b) ENERGY STAR Financing offered in association with Energy Finance Solutions(EFS). NY HPwES Incentive Structure Utah Home Performance pays a non variable 50% of the job cost so long as at least 20% savings is achieved. No loans are offered directly through Utah Home Performance but reductions on loan interest rates are offered. UT HPwES Marketing Message Comfort, reduction in energy bills, & health concerns are tipping points for participation. Marketing Opportunities Participate in existing outreach opportunities such as home shows, community fairs, and home improvement workshops that draw consumers who are already looking to do something in their home. Similarly, initiate relationships with home improvement retail establishments to reach homeowners as they make changes to their homes. Homeowner Perspectives & Marketing Homeowner Perspectives & Marketing 105 GDS Associates, Inc.

111 CATEGORY SUB CATEGORY DETAILS SOURCE Marketing Participation Emphasize "non energy" benefits. Increase awareness through BPI Study Barriers strategies like "Home Energy Makeover Costs." Marketing Participation Barriers Focus on comfort when trying to sell energy efficiency. People value increased comfort and safety over a few dollars saved on energy bills. Tucson Marketing Target Audience People who are buying a house, particularly one that they plan to settle into long term. People are more willing to make changes to a house they plan to stay in for the rest of their life. Homeowner Perspectives & Marketing Marketing Target Audience Because older homes have significantly greater potential per household, they could be given highest retrofit priority. Homes built before 1940 have more than twice the potential per household than homes built after McKinsey Study Participation Barriers Upfront Costs Action Research recommends that programs strive to reduce total project costs, out of pocket, and up front costs as much as possible (in that order). Similarly, individuals are more receptive to reduced total costs or rebates, than to incurring additional debt. Homeowner Perspectives & Marketing 106 GDS Associates, Inc.

112 CATEGORY SUB CATEGORY DETAILS SOURCE Participation Decision Making The decision to engage in many energy efficiency actions is determined by a combination of social, contextual, and psychological factors. Consistently, homeowners expressed the need to take time to review, process, and weigh the costs and benefits of their decisions. Participants strongly emphasized the need to do careful research before taking any steps. Homeowner Perspectives & Marketing Program Design Customized design that does not require as many changes to be made at once to households. Consumers are allowed to upgrade just one appliance if they desire, which has made the process much less financially daunting to consumers and has captured opportunities to upgrade expensive failed appliances. As a result, FCU has seen many repeat participants who upgrade one appliance at a time, earn more money, and upgrade another appliance at a later date. FCU Program Design Programs should be simple but flexible for homeowners. Complicated programs and messages tend to discourage homeowners. Overwhelmed or confused homeowners do not often participate. Homeowner Perspectives & Marketing 107 GDS Associates, Inc.

113 CATEGORY SUB CATEGORY DETAILS SOURCE Quality Field Verification 15% or more of all projects receive a field QA inspection. Projects are NY HPwES Assurance selected on a random basis and at the request of the homeowner. Quality Assurance Quality Assurance A test in and test out is performed for 100% of participants. However, quality assurance tests are only performed on 20% of the retrofits. APS Quality Assurance Quality Assurance Quality Assurance Develop a system for third party verification and quality assurance. HP Resource Center Quality Assurance Post testing is important due to the inconsistent quality of installation McKinsey Study and infrequent retro commissioning of equipment can increase space conditioning costs by 20 to 30 percent. Experts estimate that contractors install some 90 percent of HVAC equipment and insulation sub optimally, reducing efficiency by percent. Quality Assurance Quality Assurance Random inspections of certain projects are performed. Questar 108 GDS Associates, Inc.

114 6.2 Recommendations In reviewing HPwES Programs, industry studies and other research it became clear the Austin Energy is a leader in providing energy efficient improvement options to its residential customers. Based on the reviews and interviews with program managers it became apparent that Austin Energy s program designers spent a great deal of time identifying measures that best serve the needs of the residential consumer. However, based on this review, there are a few areas where Austin Energy could improve their program design and implementation process to achieve greater program impacts. Table 6 2: Summary of Program Recommendations Based on Best Practices Category Sub Category Recommendation Communication Internal Recommend regular internal communication between both essential and non essential staff. The keeps everyone up to date on program best practices, areas of improvement, progress todate, program design and implementation changes, etc. Contractors Auditors Recommend that all auditors be BPI certified and participate in regular Austin Energy training sessions to remain up to date on efficiency standards and program design and implementation strategies. Contractors Certifications The recommended and most common certification requirement is BPI certification. Contractors Home Assessment Recommend that the installation contractors also conduct the initial home assessment to streamline the process and keep it simple for participants. Contractors Training Recommend regular training session to review new technologies, best practices, areas for improvement, program design changes, etc. Eligible Measure Eligible Measure Recommend implementing GDS suggestions as outlined in Sections 4.6 and Evaluation Savings Recommend conducting annual evaluations to verify savings implemented during the previous program year. For more information on a recommended EM&V approach, refer to Section Home Assessment Recommended Improvements Recommend presenting improvements in a way that highlights most effective measures (i.e., measures with biggest bang for the buck ) that should be implemented now, demonstrates economies of scale when several measures are implemented together, and indicates which measures could be installed at a later date. This presents options for the homeowner in a way that allows them to review the analysis and make decisions which are appropriate for their household. 109 GDS Associates, Inc.

115 Category Sub Category Recommendation Home Assessment Tests Recommend visual home inspection; Blower Door Test to measure air leakage; Duct Blaster Test to measure duct leakage; Manual J calculations for HVAC equipment sizing; and Infrared test with an infrared camera to determine hot/cold spots and air movement through walls. Incentive Levels Recommendations for revising current incentive levels are provided in Section Incentive Structure Recommend migrating towards a performance based incentive structure to highlight the importance of achieving maximum annual savings. Marketing Message Recommend focusing on concepts with which a homeowner can identify comfort, safety, savings, etc. Marketing Target Audience Recommend targeting older homes and homes which demonstrate greater than average usage. These homes are likely to have a many cost effective opportunities for reducing energy consumption. Program Design Recommend migrating towards a performance based program design; however, to maintain flexibility and continuity, may consider dual incentive structure where participants are allowed to choose a prescriptive or performance based path. Quality Assurance Quality Assurance Recommend that test outs mirroring Home Assessment test be required for all projects to verify savings potential. Recommend Austin Energy conduct random field visits for at least 15% of all projects to verify quality of installations. 110 GDS Associates, Inc.

116 7 Evaluation Findings and Recommendations The finding and recommendations provided in this section are based on GDS s impact and evaluation analysis and address the following task: Task 7: Provide recommendations for an Austin Energy residential conservation program that maximizes energy savings while minimizing the cost to the utility. 7.1 Impact Evaluation Summary of Findings The cost effectiveness of the measures was evaluated as retrofit measures in the baseline homes. Full cost of the installations is used for evaluating the savings from the base homes. 40 The rebated individual measures were evaluated for cost effectiveness using the TRC test: The addition of attic insulation above a base of R11 is cost effective as an individual measure in all four ho me models. The repair of leaking duct work and duct sealing is cost effective as an individual measure in all four home models. Solar Window Film is cost effective as an individual measure in all four home models. The Heat Pump DHW measures were cost effective as individual measures in electric homes. Air infiltration measures were cost effective as an individual measure in the electrical heated notes, not in the natural gas heated homes. Ground Source Heat Pumps were not cost effective as individual measures. Air Source Heat Pumps were not cost effective as individual measures. Central Air Conditioner measures were not cost effective as individual measures except for SEER 14 in Home A. The cost effectiveness of currently non rebated individual measures was evaluated using the TRC test: On Demand domestic hot water measures and high efficiency conventional units were not cost effective as individual measures. ENERGY STAR window replacement was not cost effective as an individual measure. 40 The evaluation of market opportunity measures would be based on incremental cost and would need to be compared against a baseline home built to current code to evaluate the measure savings. 111 GDS Associates, Inc.

117 ENERGY STAR refrigerators and clothes washers were not cost effective as an individual measure at full cost. CFL bulb installation and CFL fixture installation are cost effective as individual measures. Due to the saturation of the area from the CFL coupon program this measure is not being considered to have a direct rebate program. Low Flow water devices aerators and showerhead measures are cost effective in all four homes even without including water and sewer cost savings. Programmable thermostats modeled with a 5 hour setback period are cost effective in all four homes. Austin Energy s home performance bonus rebate is a great advantage for realizing savings for the program since this provides an incentive to combine measures. The ASHP and Central AC measures are most cost effective when paired with additional measures. The DHW packages for all homes high efficiency storage, instant and heat pump water heater are all cost effective when paired with attic insulation to the highest level of R38, air sealing and installation of programmable thermostats. The combination of air sealing, duct sealing, duct distribution improvement and attic insulation to the highest level of R38 with or without solar window film are cost effective for all homes. The combination of air sealing, solar window film, programmable thermostats, ENERGY STAR refrigerator and clothes washer are cost effective for all four homes. The Central AC measures with SEER 14 and SEER 15 are cost effective for all three packages: o Attic insulation to R29, programmable thermostat o Attic insulation to R29, programmable thermostat, duct sealing and distribution improvement o Attic insulation to R29, programmable thermostat, duct sealing, distribution improvement and window solar film The Central AC measures with SEER 16 are cost effective for all three packages for the larger Home B and for Attic insulation to R29, programmable thermostat and window solar film for the smaller Home A. The Central AC measures with SEER 17 are not cost effective with any of the packages. The ASHP measures with HSPF 8 / SEER 14 and HSPF 8 / SEER 15 are cost effective for all three packages: o Attic insulation to R29, programmable thermostat o Attic insulation to R29, programmable thermostat, duct sealing and distribution improvement 112 GDS Associates, Inc.

118 o Attic insulation to R29, programmable thermostat, duct sealing, distribution improvement and window solar film The ASHP measures with HSPF 8.5 / SEER 16 and HSPF 9 / SEER17 are cost effective for all three packages for the larger Home B and are not cost effective for the smaller Home A. The following tables are rankings by TRC and ROI by measure for each home type. Table 7 1: Comparison of TRC calculations by home for each individual measure Efficiency Measure Home A Nat Gas Home B Nat Gas Home A Electric Home B Electric Air Infiltration: 0.75 to 0.6 ACH (A);.6 ACH to.5 ACH (B) ASHP HSPF 8 / SEER 14 N/A N/A ASHP HSPF 8 / SEER 15 N/A N/A ASHP HSPF 8.5 / SEER 16 N/A N/A ASHP HSPF 9 / SEER 17 N/A N/A Attic Insulation: R11 (base) to R Attic Insulation: R11 (base) to R Attic Insulation: R11 (base) to R Central AC: SEER 14/12 EER N/A N/A Central AC: SEER 15/12.5 EER N/A N/A Central AC: SEER 16/13 EER N/A N/A Central AC: SEER 17/13.5 EER N/A N/A Instant Water Heater Elec 0.99 EF N/A N/A Storage Water Heater Elec 0.94 EF N/A N/A Heat Pump Water Heater Elec 3.2 EF N/A N/A Instant Water Heater Gas 0.82 EF N/A N/A Storage Water Heater Gas 0.62 EF N/A N/A ENERGY STAR Clothes Washer ENERGY STAR Refrigerator W Incandescent to 13W CFL All Fixtures to 14W CFL Fixtures Aerators and Low Flow showerheads Programmable Thermostat Repair Leaking AC Ducts 85% to 90% Distribution Efficiency; Total Duct Leakage 20% to 10% ENERGY STAR Windows Window Film applied to existing windows TRC 113 GDS Associates, Inc.

119 114 GDS Associates, Inc.

120 Table 7 2: Comparison of TRC calculations by home for packaged measures Efficiency Measure Home A Nat Gas Home B Nat Gas TRC Home A Electric Home B Electric Air Sealing, Attic to R38, T stat, DHW Storage Air Sealing, Attic to R38, T stat, DHW Instant Air Sealing, Attic to R38, T stat, DHW HPWH Air Sealing, Duct Sealing, Attic to R Air Sealing, Duct Sealing, Attic to R38, Solar Film Air Sealing, Solar film, Refrigerator, Clotheswasher, T stat SEER 14, Attic to R29, T stat N/A N/A SEER 15, Attic to R29, T stat N/A N/A SEER 16, Attic to R29, T stat N/A N/A SEER 17, Attic to R29, T stat N/A N/A SEER 14, Attic to R29, Ducts, T stat N/A N/A SEER 15, Attic to R29, Ducts, T stat N/A N/A SEER 16, Attic to R29, Ducts, T stat N/A N/A SEER 17, Attic to R29, Ducts, T stat N/A N/A SEER 14, Attic to R29, Ducts, Solar film, T stat N/A N/A SEER 15, Attic to R29, Ducts, Solar film, T stat N/A N/A SEER 16, Attic to R29, Ducts, Solar film, T stat N/A N/A SEER 17, Attic to R29, Ducts, Solar film, T stat N/A N/A ASHP HSPF 8 SEER 14, Attic to R29, T stat N/A N/A ASHP HSPF 8 SEER 15, Attic to R29, T stat N/A N/A ASHP HSPF 8.5 SEER 16, Attic to R29, T stat N/A N/A ASHP HSPF 9 SEER 17, Attic to R29, T stat N/A N/A ASHP HSPF 8 SEER 14, Attic to R29, Ducts, T stat N/A N/A ASHP HSPF 8 SEER 15, Attic to R29, Ducts, T stat N/A N/A ASHP HSPF 8.5 SEER 16, Attic to R29, Ducts, T stat N/A N/A ASHP HSPF 9 SEER 17, Attic to R29, Ducts, T stat N/A N/A ASHP HSPF 8 SEER 14, Attic to R29, Ducts, Solar film, T stat ASHP HSPF 8 SEER 15, Attic to R29, Ducts, Solar film, T stat ASHP HSPF 8.5 SEER 16, Attic to R29, Ducts, Solar film, T stat ASHP HSPF 9 SEER 17, Attic to R29, Ducts, Solar film, T stat N/A N/A N/A N/A N/A N/A N/A N/A GDS Associates, Inc.

121 Table 7 3: Comparison of ROI calculations by home for each individual measure ROI Efficiency Measure Home A Home B Home A Home B Nat Gas Nat Gas Electric Electric Air Infiltration: 0.75 to 0.6 ACH (A);.6 ACH to.5 ACH (B) ASHP HSPF 8 / SEER 14 N/A N/A ASHP HSPF 8 / SEER 15 N/A N/A ASHP HSPF 8.5 / SEER 16 N/A N/A ASHP HSPF 9 / SEER 17 N/A N/A Attic Insulation: R11 (base) to R Attic Insulation: R11 (base) to R Attic Insulation: R11 (base) to R Central AC: SEER 14/12 EER N/A N/A Central AC: SEER 15/12.5 EER N/A N/A Central AC: SEER 16/13 EER N/A N/A Central AC: SEER 17/13.5 EER N/A N/A Instant Water Heater Elec 0.99 EF N/A N/A Storage Water Heater Elec 0.94 EF N/A N/A Heat Pump Water Heater Elec 3.2 EF N/A N/A Instant Water Heater Gas 0.82 EF N/A N/A Storage Water Heater Gas 0.62 EF N/A N/A ENERGY STAR Clothes Washer ENERGY STAR Refrigerator W Incandescent to 13W CFL All Fixtures to 14W CFL Fixtures Aerators and Low Flow showerheads Programmable Thermostat Repair Leaking AC Ducts 85% to 90% Distribution Efficiency; Total Duct Leakage 20% to 10% ENERGY STAR Window U = 0.40; SHGC = Window Film applied to existing windows GDS Associates, Inc.

122 Table 7 4: Comparison of ROI calculations by home for packaged measures Efficiency Measure Home A Nat Gas Home B Nat Gas ROI Home A Electric Home B Electric Air Sealing, Attic to R38, T stat, DHW Storage Air Sealing, Attic to R38, T stat, DHW Instant Air Sealing, Attic to R38, T stat, DHW HPWH Air Sealing, Duct Sealing, Attic to R Air Sealing, Duct Sealing, Attic to R38, Solar Film Air Sealing, Solar film, Refrigerator, Clotheswasher, T stat SEER 14, Attic to R29, T stat N/A N/A SEER 15, Attic to R29, T stat N/A N/A SEER 16, Attic to R29, T stat N/A N/A SEER 17, Attic to R29, T stat N/A N/A SEER 14, Attic to R29, Ducts, T stat N/A N/A SEER 15, Attic to R29, Ducts, T stat N/A N/A SEER 16, Attic to R29, Ducts, T stat N/A N/A SEER 17, Attic to R29, Ducts, T stat N/A N/A SEER 14, Attic to R29, Ducts, Solar film, T stat N/A N/A SEER 15, Attic to R29, Ducts, Solar film, T stat N/A N/A SEER 16, Attic to R29, Ducts, Solar film, T stat N/A N/A SEER 17, Attic to R29, Ducts, Solar film, T stat N/A N/A ASHP HSPF 8 SEER 14, Attic to R29, T stat N/A N/A ASHP HSPF 8 SEER 15, Attic to R29, T stat N/A N/A ASHP HSPF 8.5 SEER 16, Attic to R29, T stat N/A N/A ASHP HSPF 9 SEER 17, Attic to R29, T stat N/A N/A ASHP HSPF 8 SEER 14, Attic to R29, Ducts, T stat N/A N/A ASHP HSPF 8 SEER 15, Attic to R29, Ducts, T stat N/A N/A ASHP HSPF 8.5 SEER 16, Attic to R29, Ducts, T stat N/A N/A ASHP HSPF 9 SEER 17, Attic to R29, Ducts, T stat N/A N/A ASHP HSPF 8 SEER 14, Attic to R29, Ducts, Solar film, T stat ASHP HSPF 8 SEER 15, Attic to R29, Ducts, Solar film, T stat ASHP HSPF 8.5 SEER 16, Attic to R29, Ducts, Solar film, T stat ASHP HSPF 9 SEER 17, Attic to R29, Ducts, Solar film, T stat N/A N/A N/A N/A N/A N/A N/A N/A GDS Associates, Inc.

123 7.1.2 Summary of Assessment and Recommendations Are there any measures which are not cost effective that should be dropped from the HPwES Program? The public perception as supported by vendor advertising has created the impression that windows are an energy savings measure; however, window replacements are rarely justified as an energy efficient measure and should be dropped by the program. Although the air source heat pump and central air conditioning measures are generally not cost effective as individual measures. They are cost effective when combined with air sealing and duct improvements and should be continued in the program. Are there economies of scale associated with delivering packages of measures? Generally, pairing highly cost effective measures with measures that generate greater savings at a higher cost is an effective way to generate more savings while maintaining overall cost effectiveness for each project. For example, in the all electric Home A model, installing R38 attic insulation generates annual savings of 798 kwh at a TRC value of However, combining that attic insulation with air and duct sealing leads to an annual savings increase of 215% (e.g., annual energy savings of 1,721 kwh) with a slightly reduced TRC value of 2.04 (e.g., 22% reduction). Thus, packaging measures is a great way to maximize savings while minimizing costs and allows for the installation of measures with greater savings potential that many not be as cost effective as other measures. For more information on the trade offs between the various packaged measures and cost effectiveness, please refer to Section 4.4. Are there other program strategies that should be considered in order to maximize the program s energy savings potential? o Program promotion through municipalities (Mailings, program displays in municipal building, etc) o Participate at special community events to promote the HPwES Program o Create a robust marketing campaign to increase the HPwES brand awareness o One day sales and marketing seminar for contractors that provide them the skills to communicate the importance of the HPwES Program to prospective customer o Develop a cooperative advertising program that leverages advertising dollars and encourages contractors to promote the program Are there any new cost effective measures that should be added to the program? 118 GDS Associates, Inc.

124 Low flow water measures aerators and showerheads should be included in the program. The hot water savings alone make them cost effective even without the water/sewer savings. Programmable thermostats were shown to be cost effective as individual measures. This measure may require some hands on training for the homeowner to use the setbacks to achieve savings. 7.2 Process Evaluation The following is a summary of what has had been identified as some of the best practices of the Home Performance with ENERGY STAR. These best practices and self identified lessons are a synthesis of interviews with program staff and a review of program documentation as detailed within the previous section Best Practices From interviews with program staff, a review of program documentation and from previous experience with HPwES Programs and other residential energy efficiency programs targeted toward existing residential buildings the following were identified as the best practices that should be continued as elements of the Austin Energy program and may serve a model for others to replicate. Program Goals & Objectives: Both the 2007 NREL study and 2009 Sustained Excellence award support high achievements of Austin Energy in regards to the HPwES Program. Austin Energy has continually met all goals in terms of target participation numbers and an extensive contractor network. Operation and Delivery: Austin Energy meets all of the HPwES Program operation requirements. A strong inspection group that's involved throughout the retrofit process, from the verification to the final inspection, is one of the key reasons for the success of the program. Austin Energy also meets national HPwES Program contractor guidelines and has a 20% value rule to verify the quality of contractor work. Quality control. Having the on going Austin Energy inspector review each project and each contractor s performance is key to ensuring that: a) the program does no harm and b) cost effective improvements are made to the home. This often requires the education of the homeowner in order for them to agree to make the recommended improvements. So while a quality review may investigate why certain cost effective measures were not implemented, it may reveal that the absence of the measure as a customer decision (for whatever reason) and not necessarily a shortcoming of the contactor. 119 GDS Associates, Inc.

125 Home Performance with ENERGY STAR Certificate. Issuing an official document that certifies certain improvements have been made is a simple but very important best practice. It establishes, in writing from a credible source, that certain improvements have been made to the efficiency, health and comfort of the home. By having a certificate, a document that can stay with the property, it allows future owners, lenders, appraisers, realtors and all other stakeholders in the residential market to gain an understanding of the fact that the home has undergone specific energy improvements. Although it is not the silver bullet that transforms the residential market (appraisers still need to develop their own methodology via the Appraisal Institute to value these improvements), it, at a minimum, provides information to key market actors. This is something that more HPwES Programs should implement. Coordination and Communication: Internal program communications include a weekly newsletter that goes out to the Austin Energy staff announcing events, trainings and new program information, and monthly staff meetings. Participation: The number of customers that the program has served, even in a down economy is commendable. During the 2011 fiscal year, rebates reached 95% of Austin Energy s HPwES Program goal while the loans exceed the goal. Incentives: A variety of rebates and loan options are offered, including bonuses for completing all recommended conservation measures. Database and Tracking System: Data collected by the contractors to be entered in the Power Saver Program includes basic housing information such as square footage, the type of home, specific measures that qualify for rebates, account number, air test reports, and the rebate amounts. Continual Self Improvement. As intuitive as it may seem, not all programs have the ability to identify problems and proactively take measures to improve program implementation processes. This is something that GDS identified as a best practice of Austin Energy s HPwES. For example, an identified area that needed improvement was the need for electronic forms and ways of making the administration of the program less cumbersome. So often, program managers feel compelled to make a program better by instituting new policies, controls and requirements but with little or new actual improvement in the program overall. GDS commends Austin Energy in their efforts to streamline and simplify their processes Lessons Learned The following were identified in the previous section (4.5.1 Technical Memo 3) as areas for improvement and summarized as lessons learned. 120 GDS Associates, Inc.

126 Barriers to Participation: The need to generate more simplified electronic forms. This has already been identified by Austin Energy staff and is being addressed. Contractor Training: Although the Austin Energy program has requirements that contractors have a certain level of minimum training it is important to note that ongoing training is vital to almost all professions and especially so with home performance contracting. Regular (monthly or quarterly) trainings are very helpful to developing a superior home performance workforce. Most certification programs such as BPI require the maintenance of certain numbers of continuing education credits. By offering monthly trainings that offer these CEUs to the network of participating contractors; possibly in conjunction with existing or newly formed local or regional associations of home energy auditors and home performance contractors. This has been very effective in other states. Some of the additional training that has been identified as an area for improvement has been a better understanding of HVAC commissioning. Emerging Technologies: There needs to be a review of new technologies that have reached the level of commercial availability but need a stronger move into market transformation. For example, so called smart thermostats with IP and wireless capabilities are available and have the potential for savings. It is recommended that a review of these emerging technologies be initiated. Incentives: Another highlighted lesson learned is that in general rebates are favored over loans. Today s more educated homeowners understand the issues associated with additional debt and are therefore becoming more debt averse. Proper training of contractors and educating homeowners so that there is a better understanding of the fact that loans offered through a HPwES Program are low risk will help to encourage homeowners to use their own money rather than gravitating toward the so called free money or rebates only Summary of Assessment and Recommendations Appropriateness of Design Currently, Austin Energy s HPwES Program focuses on throughput in terms of program participants. This approach has served Austin Energy well to date as every year the program has reached or exceeded its participation targets. However, GDS recommends that Austin Energy transition to a more savings focused program. Setting savings targets (e.g., 20%) per participant forces the program to focus on cost effective savings and the implementation of measures instead of customer throughput. Currently, Austin Energy has many projects which have met or exceeded this 20% savings targets, but truly focusing on achieving these levels of savings for every participant will increase the cost effectiveness and savings potential of the overall program. Updating program goals will require programmatic changes at all levels of program 121 GDS Associates, Inc.

127 implemented (e.g., transition incentive structures, test in/test out procedures, contractor training, etc.). GDS has provided recommends for updating all of these program elements throughout this report and they are summarized in this section. Appropriateness of Participation Procedures Currently Austin Energy has a very thorough program participation process which includes many checks and balances. However, this can, at times, be perceived as cumbersome by the participant. GDS has provided recommendations on streamlining the initial audit process by transitioning towards an integrated contractor approach whereby the initial assessment and installation work are completed by the same contractor. This reduces the number of people a participant has to deal with and reduces the hassle of coordinating work. GDS has also provided recommendations for test in/test out procedures that Austin Energy should consider integrating into the program. GDS recommends the following tests be conducted as part of the initial assessment and then as part of the verification process to ensure the savings potential of measures installed: visual home inspection; blower door test to measure air leakage; duct blaster test to measure duct leakage; Manual J calculations for HVAC equipment sizing; and infrared test with an infrared camera to determine hot/cold spots and air movement through walls. Appropriateness of Application and Payment Process Activities Austin Energy currently has a very thorough review process in place for verifying the eligibility and appropriateness of recommended measures and the installation and quality of measures installed. This type of checks and balance, whereby Austin Energy staff review all applications before approving work and review all inspections reports before approving payment, ensures that, on paper, all projects meet program requirements. GDS has provided some recommendations which would help improve the quality of the program and the overall application process. GDS recommends that Austin Energy continue to work on streamlining the application process through the Power Saver system. GDS also recommends, in addition to the third party verification process, Austin Energy staff conduct field inspections for quality assurance purposes on 15 20% of all projects or when requested by a participant. Accuracy, Consistency and Completeness of Program Records GDS recommends that Austin Energy standardize their data tracking and reporting system for the HPwES Program. The records, as provided to GDS, are inconsistent and incomplete. There are inconsistencies (a) in the nomenclature used to indicate the types of measures installed in a 122 GDS Associates, Inc.

128 home and (b) in the type of baseline and efficient equipment data collected. These inconsistencies make it impossible to determine exactly what equipment was installed in a given home and to estimate the savings potential of that installation. The data files are also incomplete in that not every project contains all of the baseline, efficient equipment, and cost data. Depending on the type of evaluation plan Austin Energy decides to proceed with for future iterations of the HPwES Program, GDS recommends Austin Energy standardize their database and tracking system for the program to ensure that all of the necessary data is collected and that it is reported consistently for all projects. Effectiveness of Incentives in Motivating Action GDS recommends a two path approach to incentives for the HPwES Program. One path is a prescriptive approach which offers incentives a la carte. This is what Austin Energy currently offers; however, GDS recommends revisiting the per measure incentive levels so that they are more in line with incentives offered in other jurisdictions. The second incentive path would be a performance based path. This is more in line with the new 20% savings targets per home recommendation. A performance based incentive would include a range of incentives based on actual savings potential of measures installed. For more information on incentive levels and structures, please refer to Section 5.7. Effectiveness of Marketing Austin Energy currently exploits many marketing channels which allow for a broad spectrum of customers to be reached. GDS recommends that through these current marketing channels, Austin Energy focus on a message that is relatable to potential participants. Energy efficiency is oftentimes not the primary driver for customer decision making; therefore, GDS recommends that Austin Energy include messages relating to home upgrades, increased comfort, health, safety, and savings. For more information on marketing strategies, please refer to Section 5.4. Effectiveness of Internal Communications Austin Energy currently distributes a weekly newsletter to internal staff announcing events, trainings and new program information in addition to holding monthly staff meetings. Austin Energy is also currently working on a calendar to map out trainings, and implementing a multidepartmental Demand Side Management (DSM) working group to help foster communications and cooperation throughout the organization. GDS recommends that Austin Energy continue to follow through with the changes indicated. It is important to maintain regular communication throughout the agency so that all involved 123 GDS Associates, Inc.

129 either integrally or peripherally are up to speed on the program s design, changes, successes and shortcomings. It is also important to consider who should be informed and what information should be disseminated on a regular basis. For example, employees fielding customer questions should be kept up to date on program design and implementation improvements while program management should be kept informed of program expenditures, participation levels, and savings. Participant Satisfaction with Programs Currently, Austin Energy does not survey participants to determine satisfaction with the HPwES Program. GDS recommends that Austin Energy survey not only participants but nonparticipants and participants who fail to implement measures recommended in the initial home assessment. The findings from these surveys could help identify barriers to participation, areas for improvement, best practices. GDS recommends that Austin Energy conduct these surveys on an annual basis so that each year the program can evolve to better meet the needs of Austin Energy s customer base. Opportunities for Process Improvement GDS commends Austin Energy for running a successful HPwES Program which, in many areas, is a nationally recognized best practice program. GDS has provided recommendation throughout this report which would help to streamline the delivery of the HPwES Program and increase program savings potential. GDS commends Austin Energy for their current efforts in streamlining the application process with the Power Saver system. GDS recommends that Austin Energy also consider implemented an integrating contractor system whereby the installation contractor also conducts the initial home assessment. This would streamline the application process from the perspective of the participant by minimizing the number of organizations needed to coordinate the efficiency improvements. GDS also commends Austin Energy for their current quality assurance protocols; however, to enhance the practice, GDS recommends that Austin Energy require, as part of the final third party inspections, test outs for all tests conducted in initial home assessment. Additionally 15 20%% of all projects should be selected to receive a field quality insurance inspection by Austin Energy staff. All of these practices will ensure that Austin Energy is running a streamlined and high quality HPwES Program. Comparison to Best Practices 124 GDS Associates, Inc.

130 Below is a summary of the best practices and how Austin Energy s HPwES Program compares. More information on best practices and GDS recommendations for ways in which Austin Energy can improve their current HPwES Program, please see Section Table 7 5: Summary of HPwES Program Best Practices Best Practice Provide easy and affordable pathways for homeowners to get involved with the program, with significantly higher benefits for deep whole house retrofits Leverage established brands (such as ENERGY STAR ) and existing utility customer relationships to enhance marketing and outreach efforts Coordinate with local businesses and training programs to expand the local contractor pool as demand for retrofit services grows Support industry growth and allow companies to form relationships with customers Involve local contractors at all stages of program design and implementation Stimulate industry capacity by offering subsidies for training, equipment and marketing Case Study Austin Energy Practice GDS Recommendation Currently offer a Home Recommend examining an option for Performance Bonus two program paths: a prescriptive incentive for participants option and a performance based NJ who implemented all option. The performance based efficiency option is preferred as it provides recommendations. incentives proportional to actual savings. Austin Energy Austin Energy NYSERDA Austin Energy NJ Currently the best practice. Currently the best practice. Currently supports growth through diversity of energy efficiency portfolio and extensive contractor network. Currently the best practice. Currently offers some training opportunities. No changes recommended. Recommend focusing now improving the quality of the existing contractor network through certification requirements and on going training opportunities. No changes recommended. No changes recommended. Recommended focusing training opportunities to meet the needs of participating contractors. The needs can be determined based on program evaluation findings, contractor recommendations, new industry standards, program design changes, etc. 125 GDS Associates, Inc.

131 Focus marketing, contractor recruitment and training based on an assessment of industry capacity and the existing customer base Encourage retrofits, not just audits, and support an integrated contractor model Work closely from the start with private sector participants and solicit their feedback regularly Plan for sufficient staffing and efficient administrative processes to avoid delays in payment Collect data, analyze and adjust Develop a system for third party verification and quality assurance NJ NYSERDA NYSERDA NJ NYSERDA Austin Energy Currently has an extensive contractor network and high program participation. Currently encourages participation by offering rebates for installation of measures recommended through home audits. Currently no regularly established means of feedback. Currently program staff feels understaffed. Currently collect basic data. Currently identified as a best practice. Recommend updating program goals from participation levels to savings levels. This refocus will cause a ripple effect of changes throughout the program (e.g., changes to target audience, contractor training requirements, incentive structures, etc.). Recommend implementing a performance based incentive structure to maximize savings potential. Also recommend an integrated contractor model (i.e., same contractor performance assessment and installation) to streamline the process for customers. Recommend conducting regular process evaluations to evaluate program best practice and areas for improvement. This should include surveys with participants, non participants, and program partners. Recommending additional staff to support program and enhance program quality. Recommend standardizing data requirements for all projects so that meaningful evaluations can be conducted and savings can be accurately estimated. Recommend the continued use of a third party for project verification. Recommend conducting the same test at the completion of a project that were conducted during the initially assessment to verify the savings potential of installed measures. Austin Energy should also conduct field inspections on a random sample of projects. Obtain Data for Assessment of Free Riders and Free Drivers 126 GDS Associates, Inc.

132 It was decided at the beginning of the project that GDS would not conduct participant and nonparticipant surveys in order to assess free rider and free driver rates. 41 If Austin Energy is interested in these statistics, GDS would recommend Austin Energy conduct a full net to gross study on their existing HPwES Program. Obtain Data for Assessment of Savings Persistence It was decided at the beginning of the project that GDS would not conduct participant surveys in order to assess the behavior of participants and determine the persistence of savings associated with measures installed under the HPwES Program. If Austin Energy is interested in the persistence of savings associated with HPwES projects, GDS would recommend Austin Energy survey HPwES participants to better understand how participants are behaving since the implementation of the HPwES measures. Obtain Data for Assessment of Spillover It was decided at the beginning of the project that GDS would not conduct participant surveys in order to assess areas of participant spillover 42 and the influence that participation had on participant decisions. If Austin Energy is interested in understanding the spillover effects of the HPwES Program, GDS would recommend Austin Energy survey HPwES participants and nonparticipants to better understand how the HPwES Program influenced purchasing and behavior decisions. 41 A Free Driver is a non participant who has adopted a particular efficiency measures or practices as a result of an evaluated program. A Free Rider is a program participant who would have implemented the program measure or practice in the absence of the program. 42 Spillover refers to reductions in energy consumption and/or demand caused by the presence of the energy efficiency program, beyond the program related gross savings of the participant. There can be participant and/or non participant spillover. 127 GDS Associates, Inc.

133 Appendix A. TREAT Model Assumptions for Prototype Homes The following table contains a breakdown of the square footage of the HPwES participating homes. Table A 1: Square Footage of Homes Retrofitted Square Footage No. Projects Average Square Footage < to <1,000 2, ,000 to <1,600 12,791 1,312 1,600 to <2,000 7,265 1,783 2,000 to <2,500 5,576 2,218 2,500 to <3,000 2,464 2,720 3,000 to <3,500 1,398 3,215 3,500 to <4, ,702 4,000 to <4, ,194 4,500 to <5, ,721 5,000 to <5, ,216 5,500 to <6, ,677 6,000 to <10, ,332 10,000 to <20, ,113 >19, ,845 Table A 2: Vintage of Homes Retrofitted Home Vintage No. Projects pre 1900's 's 's 's 's 's 1, 's 3, 's 4, 's 8, 's 10, 's 2, 's 1, GDS Associates, Inc.

134 The following table contains the baseline assumptions for HPwES prototype homes. Table A 3: HPwES Prototype Homes Home Characteristics Home A <1,600 s.f. Home B > 1,600 s.f. General Weather Site Austin, TX Heating Season October to April Cooling Season May to September No. Stories 1 story No. Bedrooms 3 bedrooms No. Occupants 4 persons Foundation Slab on Grade Attic Vented, Unconditioned Attic Roof Sloped Roof, East/West Exposure Area 1245 sq ft 2400 sq ft Footprint 30' x 41.5' Facing West 40' x 60' Facing West Vintage 1970's 1980's Infiltration & Shielding Air Leakage 0.75 ACH 0.60 ACH Unheated Space Infiltration Vented Attic 2.00 ACH Building Air Tightness Average Surface Construction Above Grade Walls to Exterior 2x4 16 oc Fiberglass Batt (R12) Attic 2x8 16 oc Fiberglass Batt (R11) Slab Floor Insulation Uninsulated 4" Concrete Slab with Carpet (R2) Windows & Doors Glazing Single Pane, Clear Double Pane, Clear Frame Aluminum without thermal break Window Shades? Use in summer Size (W"xH") 36"x60" # of Windows / % of Wall Area 10 windows / ~ 13% 18 windows / ~ 13% Doors Two 36" Doors R2 Thermostat, Lights, Appliances Programmable Thermostat? No Heating Set. Temp. 70 deg. F Cooling Set Temp. 77 deg. F Hours per Day Occupied 16 hrs. Typical Lighting Yes 50% CFL bulbs, 50% incandescent bulbs 129 GDS Associates, Inc.

135 Typical Appliances Yes, Laundry 3 loads/week Yes, Laundry 5 loads/week Mechanicals Natural Gas Heating Natural Gas Furnace Forced air, Induced Draft Input Capacity 60,000 Btu/hr 80,000 Btu/hr Annual Efficiency 78% 80% Location Attic Design Supply Temp. 130 deg. F Domestic Hot Water Natural Gas, Storage Water Heater Entering Cold Water Temp. 65 deg. F Location Conditioned Space (First Floor) Tank Volume 40 gallons Energy Factor 0.54 Mechanicals Electric Heating Electric Air Source Heat Pump Input Capacity 36,000 Btu/hr 60,000 Btu/hr Annual Efficiency 6.3 HSPF 7 HSPF Location Attic Design Supply Temp. 130 deg. F DHW Electric, Storage Water Heater Entering Cold Water Temp. 65 deg. F Location Conditioned Space (First Floor) Tank Volume 40 gallons Energy Factor 0.83 Air Conditioning Total Output Capacity 36,000 Btu/hr 60,000 Btu/hr SEER Design Supply Temp. 55 deg. F Distribution System Est Total Distribution Efficiency 85% Insulation R Value R2 R5 Duct Test Leakage at 25PA ( CFM / 20% 480 CFM / 20% in) / % conditioned Floor Area % Total Ductwork in First Floor 10/10 supply/return % Total Ductwork in Attic 90/90 supply/return Hot Water Demand Are dishes handwashed? No Shower Heads Regular Flow = 3.4 GPM Faucets Regular Flow = 3.4 GPM 130 GDS Associates, Inc.

136 Table A 4: HPwES Prototype Homes MMBtu Usage Usage Natural Gas Heating and DHW Home A Home B Electricity Cooling 5,974 kwh/yr 7,574 kwh/yr Base Load 6,708 kwh/yr 7,929 kwh/yr TOTAL 12,681 kwh/yr 15,502 kwh/yr Natural Gas Heating 125 therms/yr 210 therms/yr Base Load 223 therms/yr 245 therms/yr TOTAL 348 therms/yr 455 therms/yr Energy Heating 12.5 MMBtu/yr 21.0 MMBtu/yr Cooling 20.4 MMBtu/yr 25.8 MMBtu/yr Base Load 45.2 MMBtu/yr 51.6 MMBtu/yr TOTAL 78.1 MMBtu/yr 98.4 MMBtu/yr Usage Electric Heating and DHW Home A Home B Electricity Heating 1,661 kwh/yr 2,207 kwh/yr Cooling 5,441 kwh/yr 7,251 kwh/yr Base Load 10,927 kwh/yr 12,825 kwh/yr TOTAL 18,028 kwh/yr 22,283 kwh/yr Energy Heating 5.7 MMBtu/yr 7.5 MMBtu/yr Cooling 18.6 MMBtu/yr 24.7 MMBtu/yr Base Load 37.3 MMBtu/yr 43.8 MMBtu/yr TOTAL 61.5 MMBtu/yr 76.0 MMBtu/yr 131 GDS Associates, Inc.

137 Table A 5: Base Load Home A 132 GDS Associates, Inc.

138 Table A 6: Design Heating and Cooling Loads Home A 133 GDS Associates, Inc.

139 Table A 7: Base Load Home B 134 GDS Associates, Inc.

140 Table A 8: Design Heating and Cooling Loads Home B 135 GDS Associates, Inc.

141 Table A 9: Base Load Home A, Electric 136 GDS Associates, Inc.

142 Table A 10: Design Heating and Cooling Loads Home A, Electric 137 GDS Associates, Inc.

143 Table A 11: Base Load Home B, Electric 138 GDS Associates, Inc.

144 Table A 12: Design Heating and Cooling Loads Home B, Electric 139 GDS Associates, Inc.

145 Appendix B. Sample Evaluation Measurement and Verification Plan This section describes draft impact and process evaluation plans for the Austin Energy Home Performance with ENERGY STAR Program (HPwES). GDS recommends that Austin Energy staff review these draft plans and provide comments back to GDS. GDS will then address the Austin Energy staff comments and revise these plans as appropriate. 1.0 Impact Evaluation Plan An impact evaluation plan for the next full program year is described in this section. The impact evaluation will include a billing analysis for projects installed during the program year. The exact timing of this impact evaluation will need to be determined by Austin Energy staff. It will be necessary to collect one year (for each time period) of pre and post retrofit consumption data for all participants during the program year. GDS has reviewed similar impact evaluation plans and impact evaluation reports for other organizations that have implemented HPwES Programs to ensure that this evaluation plan covers all important aspects of an impact evaluation for this type of energy efficiency program. 1.2 Research Objectives The purpose of impact evaluation is to establish rigorous and defensible estimates of the savings that can be attributed to the Austin Energy HPwES Program. This process involves determining the realization rate for gross savings and the free rider and spillover factors for net impacts. In both of these aspects of the impact evaluation, the evaluators need to determine how to achieve the desired precision, minimize the possibility of bias in the result and assess the validity of the results. A secondary object is to investigate non energy impacts (NEIs) for this program. Each of these key aspects of impact evaluation is discussed below Determine Realization Rates for Gross Savings An important component of the impact evaluation is to develop reliable estimates of the realization rates for gross electricity, demand and other fuel savings. There are numerous impact evaluation approaches to achieve this goal, including billing analysis and verifying the installation and the estimation of savings for a representative sample of program participants. GDS is proposing a billing analysis approach to balance the level of effort required, availability of data and the cost of performing the impact evaluation Attribution An equally important element of assessing HPwES Program impacts is to construct solid and defensible estimates of all impacts that are program induced (rather than naturally occurring). This assessment of net effects will cover numerous potential sources of spillover, including both participant and non participant spillover. Consequently, the research into net savings will need to incorporate all of the parties who may be contributing to the program s net effects, including participating homeowners, participating contractors, non participating contractors and formerly participating contractors. 140 GDS Associates, Inc.

146 1.2.3 Precision and Bias Sample sizes will be designed to target a 90% level of confidence and a ten percent margin of error for natural gas and electric savings on a statewide basis. A billing analysis of all program participants with sufficient billing data also allows for the estimation of savings at the utility level with no sampling, thus eliminating concerns about sampling precision. The impact evaluation also includes a telephone survey of participants and a billing analysis on this smaller sample of survey respondents to address the potential bias created by external events that affect energy consumption but are not in any way related to program activity. Methods will be selected to minimize self selection, non response and other sources of bias, to the extent possible. For example, bias mitigation through telephone surveys is mentioned above and covered in greater detail under the billing analysis section below. Another example is that the non response rate for telephone surveys can be reduced by ensuring that several attempts are made to contact each potential respondent at different times of the day. 1.3 Activities Gross Impacts One of the most reliable impact evaluation methods for energy efficiency programs targeting existing buildings is using pre and post energy use data to statistically analyze average energy savings, referred to as billing analysis. Billing analysis is feasible when savings are measurable in comparison to total household consumption (often recommended to be 8 to 10% of preinstallation consumption), when the population is fairly homogenous and when the program tracking system provides sufficiently detailed information to support the analysis. This approach is viewed by many leading program evaluation firms as the least costly approach to obtain reliable savings estimates at a high rigor level for this type of program. In addition to the improved rigor, billing analysis is generally less costly than other approaches due to the fact that the billing data is already collected by utilities such as Austin Energy. Consequently, most of the population can be included in the model with little additional cost required for data collection. A related advantage of using billing analysis on all participants is that reliable estimates at the utility level are quite likely. Few other rigorous impact methods can allow utility level estimates with only a small incremental cost. Another advantage of billing analysis is that savings are based on actual behavioral patterns and snap back, i.e., trading some part of the energy savings for increased comfort, is incorporated into the savings estimates. The HPwES Program is a good candidate for a billing analysis due to the detailed information regarding energy end uses and savings estimates collected for each home and maintained in the program tracking system. Program savings are claimed only for projects that are reported as completed by the HPwES contractor, and the program tracking system includes a detailed description of each measure and the completion date. A challenge in conducting a residential billing analysis is that residential use tends to vary tremendously from one home to the next depending on the number of occupants in the home, 141 GDS Associates, Inc.

147 the types of energy end uses, life style and numerous other non program related factors. GDS recommends using a regression technique based on the Analysis of Covariance 43 (ANCOVA) to estimate program savings by allowing each participant to act as his or her own control and accounting for the energy characteristics of the home within the statistical analysis. The ANCOVA method addresses the energy related characteristics of the home that do not change over time, such as the size of the home, the lifestyle of the occupants, and the presence of major electric or gas appliances and heating equipment. GDS recommends that the program evaluation team review the data and assess the results to ensure that the savings estimates are statistically sound. Testing for violations of statistical assumptions should be conducted and any violations should be mitigated to the extent possible. The information theoretic approach to model selection should be employed to ensure that the selection of the final model is based on objective statistical standards. While the ANCOVA method controls for the characteristics of the home that are stable over time, it is possible that the estimation of program impacts can be affected by other factors that do change over time. These types of changes can be conceptualized in two broad categories: Changes in the overall economy that affect the residential market in a global way, such as volatile gasoline prices, unemployment rates, or an increase in home heating costs. Individual changes that affect specific homes, such as acquiring new household members, taking a longer vacation, or having a change in one's work schedule These issues need to be considered and addressed separately. Economic impacts can introduce either an upward or downward bias to the results. For example, a billing analysis may indicate that participants on average are saving 100 kwh per year, but it may be that on average residential electric consumption increased by 100 kwh per year during the same period, suggesting that the actual program impacts are 200 kwh per year. Given that the national economy a period of contraction for the past four years, one would expect that energy consumption may be reduced across the board, making it likely that program savings may be under or over estimated, depending upon the timing of the pre and post installation periods. 43 Covariance is a measure of how much two variables change together and how strong the relationship is between them. ANCOVA is a general linear model which blends an analysis of variance with an analysis of relationship between dependent and independent variables. ANCOVA evaluates whether population averages of dependent variable are equal across level of a categorical independent variable, while statistically controlling for the effects of other continuous variables that are not of primary interest (i.e., covariates). In essence, when performing ANOVA, we are adjusting the dependent variable averages to what they would be if all groups were equal on the covariates. 142 GDS Associates, Inc.

148 There are two common approaches to counteract these factors within the statistical analysis: 1) include a non participant comparison group in the analysis, and 2) incorporate trends lines into the analysis. Unfortunately, the first strategy can introduce net effects into what should be an estimate of gross savings. To that end, a billing analysis that includes both participants and a non participant comparison group will be likely produce savings estimates that are somewhere in between net and gross effects and, thus, difficult to interpret with any degree of accuracy. Incorporating trend lines is a cleaner approach and will be the preferred strategy applied in this evaluation. GDS recommends that the program impact evaluation rely on third party economic data, often available through public sources, to develop these trend lines. It is also possible to construct trend lines from non participant consumption data. This approach will be pursued if it is possible to obtain billing data for a substantial subset of residential non participants. Determining in home changes that may affect energy use can substantially improve the model. This issue will be addressed by fielding a survey of participants to gather data to supplement the billing analysis. This survey should be designed to obtain additional information regarding typical changes occurring with the residence during the pre and post installation period (such as replacing a refrigerator, and changes in schedules and occupancy). In addition, this survey also provides the opportunity to investigate the more personal impacts of the national and regional economic trends, such as changes in employment status. Since this type of information may be sensitive to some participants, Austin Energy staff will need to consider how to incorporate this line of questioning into the survey and how the question can be worded to minimize negative responses. This survey will provide valuable insights for interpreting the billing analysis. Given the wide variability in residential energy use, a large sample size will be necessary. The billing analysis will be conducted with this subset of participants who receive the phone survey and with all participants with complete billing data, and the results will be compared for reliability. Other recent impact evaluations of similar programs have found that adding information from a telephone survey to the billing model has a better chance of success with HPwES's high estimated savings per home. Given the relatively large savings in comparison to total energy use (15%), it seems reasonable to expect that a model with fewer observations may still produce robust results. Even if the smaller sample size does not improve the model, the phone survey will still provide critical information about the external influences on energy use for this variable market segment. In order to conduct this analysis, Austin Energy staff will require utility account numbers, electric and natural gas consumption records (kwh, kw, therms and interval/advanced meter data) for participants and non participants (if possible), to be provided electronically in a readily accessible format Demand Savings Demand (kw) savings can be estimated by applying a kwh/kw factor to the energy savings. This factor may be available already at Austin Energy. If this factor is not available, it can be estimated with residential building energy simulation models such as RightSoft. 143 GDS Associates, Inc.

149 1.3.3 Non Energy Impacts The impact evaluation should also investigate NEIs for this program, such as improved comfort, enhanced health and safety or reduced operation and maintenance costs. If Austin Energy wants to collect this information, the first step is to construct a list of the potential NEIs and then to select from this list a limited number of possibilities that may be measurable. The next step is to construct questions to be included in the participant telephone survey to ascertain whether the participants perceive benefits related to the selected NEIs. The results of this analysis can be incorporated into the final report. The assessment of NEIs can build upon prior work conducted on NEIs by such organizations as Wisconsin Focus on Energy and NYSERDA Attribution The impact evaluation should explore participant and non participant spillover and participant free ridership by using an enhanced self report survey process with multiple decision makers. For the sampled projects, interviews should be conducted with the participating homeowners and HPwES contractors providing more than one source of information for each sampled project. Interviews with the various players can be designed to investigate the decision making process, including the level of involvement of the participating homeowners, HPwES contractors and Austin Energy program staff. Because participating homeowners may not be aware of the influence of the program on the availability of energy efficiency services, the evaluation effort will involve review of, and potential adjustments to, their responses about free ridership based on participating contractors judgments regarding the program s influence on their offering of such services. The survey instruments can build off similar surveys implemented by Wisconsin Focus on Energy and NYSERDA. There are other research approaches for estimating attribution, including complex statistical methods such as nested logit and structural equation modeling, as well as the possibility of pursuing some variation of cross state comparisons. The complex statistical methods require the collection of data from a significant sample of non participating homeowners that obtained a similarly comprehensive home assessment (CHA) and efficiency measures. The statistical models measure the characteristics and attitudes common to the participating and nonparticipating homeowners with both CHAs and efficiency measures in order to correct for the self selection bias within participation. Reliable identification of homes with CHAs is not possible. Contractors will generally say they offer a comprehensive assessment without understanding the requirements within the program defined CHA. This same difficulty also applies to obtaining valid data for a cross state comparison from interviews with contractors in the comparison areas without a similar program. The self report approach proposed for this evaluation includes enhancements from comparing the responses from multiple perspectives and incorporating this information into the estimation of net effects. These inquiries will also add depth to the measurement of freeridership by comparing the information provided by multiple decision makers to support an analysis of construct validity and produce greater reliability in the estimates. Figure 3 outlines 144 GDS Associates, Inc.

150 the various sources of information that will be used within the enhanced self report approach for this evaluation. Among participating homeowners and contractors, the impact evaluation should examine inside spillover (participating homeowners who install additional measures beyond those included in program records), and outside spillover (participating contractors who install measures at non participating homes because of the influence of the program). A recent HPwES evaluation showed a modest spillover effect (2% of program savings) from partial participant spillover (homeowners who received a comprehensive home assessment (CHA) and installed at least some of the recommended measures, but not through the program). The impact evaluation can further investigate non participant spillover among contractors (measures installed by non participating contractors because of the influence of the program). Non participant spillover among homeowners (measures installed by non participating homeowners because of the influence of the program) does not need to be considered since the incidence is likely to be low, making it difficult to attain the desired precision levels. This latter spillover could also overlap with the contractor spillover and would be difficult to separate the two in order not to double count program spillover. In addition, recent impact evaluations for other HPwES Programs suggests that there may be significant spillover from formerly participating contractors. After initial participation in the program, these contractors continue to install products and employ methods promoted through the HPwES, but without direct program support. This avenue can be more thoroughly explored in this evaluation. These methods will be used to derive a draft triangulated net to gross ratio (NTGR) which will provide a high level of construct validity for the net savings estimates. Based upon comments received from Austin Energy staff at this point in the evaluation, the impact evaluation can finalize the free ridership and participant spillover estimates. 1.4 Populations/Samples Sampling will likely be a component in the estimation of both gross and net impacts, as discussed in more detail below. For this program, sample sizes are designed to obtain the 90/10 confidence/precision targets at the program level Gross Impact Sampling For the verification of gross savings, the preferred impact evaluation approach is a billing analysis. In this case, all participants with sufficient billing history will be included in the analysis and no sampling will be necessary. Thus, there will be no sampling error, and it will also be possible to conduct the analysis at the utility level. 145 GDS Associates, Inc.

151 The Impact Evaluation Team also intends to field a telephone survey to expand the data inputs into the billing analysis. This survey will be leveraged to support the net to gross and NEI components of the study. There is no clear consensus on how to determine sample sizes to reach a specific precision/confidence level for the type of complex, multivariate analysis planned for this program. Based on previous experience with other residential program evaluations and given the expected savings in comparison to pre installation energy use (15%), GDS estimates that 600 completed surveys are likely to comprise a sufficient sample size to estimate household saving at the target precision of 90/10 or better at the program level. A stratified random sample for the telephone survey will be selected based on annual household energy use, for the purposes of ensuring that the sample is representative of the total program population. The Austin Energy billing records will be needed prior to the sampling to ensure that sufficient billing history is available for all participants selected for the telephone survey. The regression models will be run including all participants with sufficient billing records and also with the restricted sample from the telephone surveys. The results from both analyses will be presented and compared, with a discussion of the reliability, precision and potential bias (if any). If the precision target cannot be met with the restricted sample, the results from the more comprehensive model can be used as the source of final program savings Attribution Sampling Surveys will be fielded for participating homeowners, participating contractors, nonparticipating contractors and formerly participating contractors. For participating homeowners, the attribution questions will be incorporated into the gross impacts telephone survey of participating homeowners and renters. Given that the sample size of 600 was established to provide a sufficient sample for a multivariate billing regression model, it is more than adequate to estimate the attribution parameters of interest (such as the likelihood of free ridership and spillover) at the 90% confidence and 10% precision standard statewide, for the program. This sample size may also produce reliable utility level results that meet the 90/10 confidence/precision standard (depending upon the sampling requirements for the billing analysis versus the attribution study). The samples sizes for the participating and nonparticipating contractors and formerly participating contractors are based on estimating a proportion and achieving the 90% confidence and 10% precision level at the program level. The finite population correction factor will be applied where appropriate Sampling Issues There are a number of issues that complicate the sampling for both net and gross impacts, as listed below. Austin Energy kwh usage data will be needed for all program participants. Even if all of the participants are correctly identified and matched with kwh usage data, it is likely that some of 146 GDS Associates, Inc.

152 the participants will not have the full two years worth of billing records required for the analysis (12 months pre and post installation). Since non participant billing data is needed for the purpose of incorporating economic trends into the billing analysis, it will be necessary to establish a method to collect and store this data. These issues will need to be resolved to ensure that the sampling can proceed within the required time frame. The sampling plan will be developed as part of the detailed evaluation work plans, and will address these issues. 1.5 Data Collection To be able to conduct the sampling and proceed with the evaluation, the impact evaluation team will need the following information from the Austin Energy staff at a minimum: Project level information, including address, contact information for the site owner and contractor Measure level information, such as a description of the measures, quantity installed, the energy savings (electric, gas and other fuels), demand savings, measure life, installation costs House level information, including the size of the house, the number of occupants, the fuels used for space and water heater, other major electric and gas end uses In addition, critical information will need to be collected from third party sources, as described below. Monthly kwh consumption data (both electricity and natural gas) for program participants, covering the date of the read, account number, premise number, amount of energy used, tariff, rate class, whether the read was estimated or actual, city or zip code, and (if available) weather station Utility consumption data (electricity and natural gas) for some subset of residential customers (same fields as listed above) for use in developing trend lines Weather data, which may be available from the utilities or from the national weather service (National Oceanic and Atmospheric Administration, NOAA) Economic trends, such as gasoline prices and unemployment rates, often available from public sources such as the Department of Energy and Bureau of Labor Statistics 147 GDS Associates, Inc.

153 Table 1 below displays detailed information on the planned surveys, the population, as well as the sample size and sampling precision. Table 1. Home Performance with ENERGY STAR Impact Evaluation Survey Specifics Target Group Participating Homeowners Telephone Survey Participating Contractors Telephone Survey Non Participating Contractors Telephone Survey Formerly Participating Contractors Telephone Survey Estimated Population Size Estimated Sample Size Expected Sampling Precision Survey Administration By ~6, /10 Survey Contractor /10 Survey Contractor Large 70 90/10 Survey Contractor (census) 90/10 Survey Contractor Expected Start of Fielding 2.0 Process Evaluation Plan The purpose of the process evaluation of the HPwES Program is to assess program operations, identify potential issues, and to develop recommendations to improve the efficiency and effectiveness of program operation and performance. In addition, the process evaluation can document program progress and explore the value, benefits and concerns of constructing projects and living in Home Performance with ENERGY STAR homes for contractors and households. 2.1 Research Objectives The research objectives for the process evaluation of the HPwES Program are described below. In order for the process evaluation to provide the greatest value, other relevant or necessary objectives may be added, or objectives listed below may change somewhat, as the timing of this research draws closer. 1. Assess and improve program performance, including: a. Assess program processes with program staffs and explore opportunities to improve the efficiency and effectiveness of program opportunities to increase program outreach and throughput b. Assess response to program processes from contractors to explore opportunities to improve the processes efficiency to increase program outreach and throughput, including an investigation of contractor response to BPI training and certification c. Assess the response of household decision makers to the program processes and operations, and to explore opportunities to improve efficiency and effectiveness of the process and the access to program services to increase program participation 2. Explore the value, benefits and concerns associated with completing projects and living in homes treated through the HPwES Program, such as: 148 GDS Associates, Inc.

154 a. Contractors perceptions of the value, benefits or concerns around completing projects using HPwES Program requirements b. Household decision makers perceptions of the value, benefits and concerns of living in homes treated through the HPwES Program. c. To explore and identify ways to reduce free ridership and maximize spillover of program benefits. 3. Document activities and progress and assess efforts toward achieving the goals and objectives of the program, including: a. Document the history and progress of the program through review of program materials and data, and through interviews with Austin Energy program implementation staff b. Review program tactics and explore the response of contractors and households to program tactics c. Assess barriers to participation and opportunities to reduce barriers facing contractors and households d. Assess contractor and customer awareness, understanding and perception of the options for energy efficiency upgrades to homes, including new programs offered by utilities and how they relate to Austin Energy s HPwES Program. 2.2 Activities The process evaluation team should interview Austin Energy and program implementation staff to obtain views on program progress, process, and tactics and on the value, benefits and concerns for the program. These interviews will form the basis for development of questions to ask contractors and household decision makers about program processes and tactics. The process evaluation team should then coordinate with the impact evaluation team to incorporate the free rider questions into the process evaluation surveys. This will provide an opportunity to ask household decision makers about their decision making process at a time closer to their decision than the impact evaluation typically can achieve. The process evaluation team will also develop some screening questions on the value, benefits and concerns contractors and households have experienced with HPwES homes. As all questions in the surveys will necessarily be closed ended, these questions will form the basis of selecting a subsample from those able to provide additional information. In depth interviews will then be conducted with this subsample of contractors and household decisions makers to obtain in depth information on perceptions of the value, benefits and concerns (for contractors) of constructing projects and (for household decision makers) of choosing this approach and living in a HPwES home. The survey respondents who have comments on the values and benefits of the program and are willing to participate in a second interview is likely to be small. By using the survey to identify those with either positive or negative experiences of the program, it is assumed that bias in responses to the in depth interviews can be minimized. The interviews should be conducted recently after program participation. 2.3 Populations/Samples The samples should be drawn from the program database for participants and partial participants. 149 GDS Associates, Inc.

155 2.4 Data Collection The process evaluation team should conduct interviews with Austin Energy and with program implementation and quality assurance contract staff involved with the HPwES Program. The process evaluation team will implement a survey of participating and partial participating household decision makers. The survey of households will include free rider questions that will help the impact evaluation team assess free ridership among these participants. Subsamples of participating and partial participating household decision makers will be selected from the surveys for in depth interviews to better understand the value and benefits of the program for participants. 2.5 Special Issues The impact, process and market evaluation teams will need to closely coordinate survey development. The process team will use the free rider questions from the impact team for the participant surveys. The survey contractor will help integrate the questions to ensure the data collection process is comparable to that expected for the impact evaluation. The Process Evaluation Team will draft process questions for inclusion in the market survey of contractors. The survey contractor will help integrate the questions to ensure the data collection process is effective. 3.0 Reporting The final impact and process evaluation reports will address the key methodology, findings and recommendations for the HPwES impact and process evaluations. The report will also provide appendices with detailed documentation. Upon completion of each major evaluation study effort, findings and results will be communicated to Austin Energy program staff. Actionable recommendations and information on program progress toward goals will be provided as input to the on going Austin Energy program design and improvement process. The reports will inform program staff on recommendations arising from the evaluation and the status of their consideration or adoption of these recommendations. Reports should be prepared quarterly and annually summarizing the results on all programs and from all evaluation studies occurring in the most recent quarter or year. The latest evaluated program savings, realization rates, and net to gross ratios will be used in compiling data for these overarching reports. Quarterly reports should be completed within 60 days of the end of each calendar quarter. The annual report will substitute for the fourth quarterly report, summarizing program and portfolio progress throughout the calendar year. The annual report should be completed within 90 days of the end of the calendar year. 150 GDS Associates, Inc.

156 151 GDS Associates, Inc.

157 Appendix C. Other Home Performance Program Manager Surveys Question 1: How long has your organization offered a HPwES Program? Date Organization Contact Name Position Q1: How long has your organization offered a Home Performance with Energy Star Program? 5/22/2012 APS Gavin Hastings Program Manager since march /21/2012 Fort Collins Utilities (FCU) Kim DeVoe Energy Services Specialist since /23/2012 Home Free Nevada Denee Evans Executive Director since august /23/2012 NYSERDA Brian Atchinson Associate Project Manager 11 years 5/21/2012 Xcel Energy Jackie Ducharme Program Manager since /22/2012 NPC (Nevada Power Company Under Home Free Nevada) Kelly Vagianos Board of Directors, Secretary since august /23/2012 Rocky Mountain Power (RMP) Greg Stiles Demand Side Management Program Manager since /22/2012 Questar Gas Company Steve Bateson Program Manager 5 years 5/30/2012 Utah Home Performance Jami Walker Program Manager 2 years 5/30/2012 Tucson Electric Power Mike Baruch Program Manager 1 year Question 2: Have you completed any impact or process evaluations of your HPwES Program? Organization Q2: 2. Have you completed any impact or process evaluations of your HPwES program? If so, will you please me a copy of the most recent evaluation? APS Yes. We also perform regular M&D tests. I will send you anything I'm allowed to disclose publicly Fort Collins Utilities (FCU) An evaluation is currently under way. FCU is having a difficult time determining actual savings as opposed to "bogus" deemed savings. Home Free Nevada Not yet available but in the process of getting one together. NYSERDA on website. All public: nyserda.org 152 GDS Associates, Inc.

158 Xcel Energy No performance evaluations have been completed yet. However there is one scheduled for NPC (Nevada Power Company Under Home Free Nevada) Rocky Mountain Power (RMP) Questar Gas Company Yes. Will the evaluations. Utah Home Performance No evaluations yet Tucson Electric Power No evaluations due to funding not renewed Question 3: Description of residential energy efficiency programs offered. Organization APS Fort Collins Utilities (FCU) Home Free Nevada NYSERDA Xcel Energy NPC (Nevada Power Company Under Home Free Nevada) Rocky Mountain Power (RMP) Questar Gas Company Q3: Do you have a description of your HPwES program that you could me? Do you offer other residential energy efficiency programs for customers other than HPwES? If so, what is the criteria/motivation to participate in another residential program other than HPwES? efficiency/home efficiency program/ Areas/Energy Efficiency and Renewable Programs/Residential.aspx _CO A Nonprofit organization called Home Free Nevada runs the actual HPwES program for NPC. HFN got sponsorship from the DOE. Said he will me information. Not HPwES. Has been around longer than HPwES and did not want to change just because something new came along. 153 GDS Associates, Inc.

159 Utah Home Performance Tucson Electric Power Will . Will . Question 4: Performance based program? Organization APS Fort Collins Utilities (FCU) Home Free Nevada NYSERDA Xcel Energy NPC (Nevada Power Company Under Home Free Nevada) Rocky Mountain Power (RMP) Questar Gas Company Utah Home Performance Tucson Electric Power Q4: Is your program performance based (e.g., do you pay incentives based on achieving targeted energy savings?). If so, what percent savings do you target? Not yet. Right now we are on a prescriptive structure but are in the process of migrating toward a performance based program. No. Yes. A target of 20% savings is set. However, this target was 15% until recently; funding from Better Buildings has caused the previous 15% target to rise. No No. The rebate amount is based on incremental cost. Yes, performance based with a savings target of over 20% No. The program is prescriptive. No, we use a prescriptive model. No. Utah Home Performance pays a non variable 50% of the job cost so long as at least 20% savings is achieved. Yes. The program was originally prescriptive, but early on, it became apparent that many contractors did not meet performance requirements. A big area of concern was insulation installation, which in many cases was installed correctly in areas where it was easy to do so but poorly in areas where it was difficult. As a result, the program began using a performance based model as a tool for driving better workmanship from contractors. However, the program manager has discovered that "when you raise the bar higher, you find that some contractors are already there, others are close and adapt to the new standards, while others don't want any part of it and drop out of the program." So a tradeoff between volume and quality exists. Improving quality lowers sales volume since fewer contractors decide to remain in the program. Lastly, while the program is performance based, there is no set 154 GDS Associates, Inc.

160 percent savings target. Rather, the performance requirements are based on testing (blower door, duct blaster visual inspection, etc), and rebates are adjusted based on the results of these tests. Question 5: Eligible measures? Organization Q5: What energy efficiency measures are included in your program? Does the program require that a minimum number of measures be included in a project? APS The program offers specified measure "packages" that a participant can choose to implement (eg. Upgrade to 10 cfl's, replace water heater, etc.). However, the program also allows participants to implement just 1 measure as well. Fort Collins Utilities (FCU) 24 improvement options. Can be viewed in url from question 3. Home Free Nevada Examples of measures include envelope sealing, duct sealing, insulation, and CFL's. Yes, participants must invest at least $1000 to receive incentives. NYSERDA Everything is included. Categories include Heating and Cooling, Furnaces, Boilers, Appliances (refrigerators, dishwashers, and lighting). There is no minimum requirement for the number of measures that must be implemented to receive financial incentives. Xcel Energy At least 3 measures must be implemented for participants to receive incentives (recently lowered from 5). A complete list of measures can be found in Q3's link under "benefits." NPC (Nevada Power Company x Under Home Free Nevada) Rocky Mountain Power (RMP) Efficiency measures included in the program can be viewed by visiting the URL from question 3. There is no minimum requirement for the number of measures implemented for participants to receive incentives. Questar Gas Company An appliance program, weatherization program, and home energy audit program is offered. There is no minimum requirement for the number of measures in a project. Utah Home Performance Will . While there is no required minimum number of measures, if air sealing is recommended in the Home Performance Assessment (Audit), it must be done before moving on. Also, incentives will only be granted if at least 20% home energy savings are achieved Tucson Electric Power There is no minimum requirement for the number of measures implemented. Question 6: Financial incentives? Organization Q6: What financial incentives do you offer in your program? 155 GDS Associates, Inc.

161 APS We offer $250 per measure. We also offer loans up to $15,000 $20,000 at an interest rate of 3.99% (however, the IR is usually closer to 5%). Fort Collins Utilities (FCU) Offers a "Zilch" Loan which is being phased out. Hoping to begin bill financing in July interest will be used to finance future loans. Loan goes against property, not against homeowner. Offers rebates as well. Home Free Nevada A rebate structure is in place in which Home Free Nevada matches the participant's investment. A 5 year loan with a 2.6% interest rate is also offered. The average cost of a project is $3300. NYSERDA A few different loan options are offered as well as a rebate program based on the income of the participant. Xcel Energy Xcel mainly offers rebates to customers (cash or check) for at least 3 improvements (recently lowered from 5). Also provides contractor air sealing installation incentive. NPC (Nevada Power Company Rebate of up to a $1000 for achieving 20% energy savings. Under Home Free Nevada) Rocky Mountain Power (RMP) Rebates are offered. No loans are offered. Questar Gas Company Rebates. Utah Home Performance Utah Home Performance reimburses participants with 50% of the job cost up to $2000. No loans are offered directly through Utah Home Performance but reductions on loan interest rates are offered. Tucson Electric Power Rebates are offered. A financing program was just launched as well. However, Mike is adamant that financing is not the answer to improving participation because many people are simply unwilling to take on extra debt. Question 7: Incentive levels? Organization APS Fort Collins Utilities (FCU) Q7: How do you determine the level of incentives that are offered? (based on percent of measure cost? Based on incentives offered by other organizations?, etc) We have an incremental cost cap. Rebates cannot exceed 75% of the incremental cost or $250, whichever limit is met first. "The incentives were based on the incremental cost to bring SOP to best practice, where the cost was not excessive to do so (and not in every case as the cost cvan be excessive). For example we require and air sealing and leakage testing in out on all insulation measures. We will not allow attic or crawl space insulation to be installed without the corresponding building assembly being air sealed first. We also estimated that to reduce the air leakage by 25%, 33% and 50%, it costs about what the corresponding incentives that we give ($200, 300 and 400). And we know what the leakage reduction actually is, with a minimum reduction of 10% required, but the incentives don t kick in until leakage is at 25%, 33%, and 50%." 156 GDS Associates, Inc.

162 Home Free Nevada NYSERDA Xcel Energy NPC (Nevada Power Company Under Home Free Nevada) Rocky Mountain Power (RMP) Questar Gas Company Utah Home Performance Tucson Electric Power Rebate amounts are performance based. Rebate amounts are based on the income of the participant. 60% of incremental cost Rebate amounts are based on performance with a target of over 20% energy savings. Rebate amounts are prescriptive (eg. Based on sq. ft. of insulation installed). In order to determine the rebate amount, the incremental cost and potential savings are taken into account. Rebates are always 50% of the job cost so long as the participant achieves at least 20% home energy savings. The results of tests, such as the blower door test and duct blaster test, determine the incentive paid to the participants. Question 8: Required contractor certifications and training? Organization APS Fort Collins Utilities (FCU) Home Free Nevada NYSERDA Xcel Energy NPC (Nevada Power Company Under Home Free Nevada) Q8: Are contractors who participate in your program required to have any special training or certification? If so, what kind of special training of certification? Requires contractors to be licensed, have a BPI certification for every auditor employed by the contractor, maintain enrollment in the mentorship program, and pass a prescreening test. Also, requires contractors to take an Energy modeling & software training course. Yes. FCU has a partnership with Lightly Treading and Energy Logic. Has developed more rigorous requirements than any other utilitly Kim has seen. A mentorship program is also in place. Contractors are only required to have BPI certification. RESNET certification used to be required as well, but management determined that requiring both BPI and RESNET certification was too restrictive and eliminated too many potential contractors. However, contractors must also meet insurance requirements and present valid business licenses. Yes. Contractors must be BPI accredited. Yes. BPI or NATE (eg. for AC) depends on expertise. Requires CAZ training as a "band aid" for any training that may not include all concepts covered in CAZ. Yes. Contractors are required to have BPI or RESNET certification 157 GDS Associates, Inc.

163 Rocky Mountain Power (RMP) Questar Gas Company Utah Home Performance Tucson Electric Power RMP is currently restructuring they way it deals with contractors. At the moment contractors are required to provide references for accreditations and must complete basic training through the utility. The technical requirements for contractors are set by the Regional Technical Forum, a division of the Northwest Power Planning Conservation Console. The new system will require strict testing to enter RMP's network and will allow a limited number of project failures before contractors are dropped from the network. Yes. Weatherization contractors are required to complete training directly through Questar gas. Air sealing contractors are required to be BPI certified. All contractors must have prior experience in the industry. Contractors who perform the work do not need any certification. At least one person in the installation crew visiting a household must be BPI certified. The contractor must also be registered with the Registrar of Contractors. Question 9: Required inspector certifications and training? Organization APS Fort Collins Utilities (FCU) Home Free Nevada NYSERDA Xcel Energy NPC (Nevada Power Company Under Home Free Nevada) Rocky Mountain Power (RMP) Questar Gas Company Utah Home Performance Tucson Electric Power Q9: Are inspectors who participate in your program required to have any special training or certification? If so, what kind of special training or certification? Inspectors must have a building analyst certification, participate in ongoing training, and have at least 2 years experience as a contractor. x Inspectors must be BPI certified. All inspectors must be BPI accredited in their technical area. x Yes. Inspectors must complete QA/QC training. Inspectors are 3rd party vendors who must meet the requirements of the Regional Technical Forum. Yes. Inspectors also complete training through Questar. Inspectors are required to have either BPI or RESNET certification. Inspectors are also required to have BPI certification. Question 10: Test in/test out procedures? Organization 158 GDS Associates, Inc. Q10: Does your program require any type of testing of a home before and after installation of measures, such as blower door testing? If so, what type of testing? If so, who conducts the testing program staff, contractors,

164 APS Fort Collins Utilities (FCU) Home Free Nevada NYSERDA Xcel Energy NPC (Nevada Power Company Under Home Free Nevada) Rocky Mountain Power (RMP) Questar Gas Company Utah Home Performance Tucson Electric Power inspectors (either internal or 3rd party)? Tests performed include the blower door test, duct test, pressure pan, and duct blaster. All insulation must pass a visual inspection and infrared is performed when appropriate for the climate. We test out everything. Yes. Blower door testing. Pre and post measurements compared in order to determine the rebate received by consumer. Tests performed include the blower door test as well as all of the BPI tests. Home Free Nevada no longer requires all comprehensive tests to be done because they have found data suggesting that participants are not willing to pay for such tests. However, even though the number of required tests has decreased, Home Free Nevada feels that enough tests are still performed in order to obtain the necessary amount of information for each installation. Yes. Testing performed includes blower door testing, draft testing, ambient and stack carbon monoxide testing, as well as a visual inspection of insulation and appliances. Yes. Blower door testing (test in and test out). Tests for.15 NACH delta reduction, carbon monoxide levels, ifrared. Uses iaudit Pro snughome software. Yes, blower door testing is performed. Optimizer software is used similar to RESNET No testing is performed (no test in or test out). A "just gotta do it" mentality is followed. RMP's experience has shown that focusing on having the work done correctly is more important than emphasizing savings targets because savings are maximized only when the work is done correctly. Yes. Air sealing quality testing is performed as well as any other test required by the contractor. Random inspections of certain projects are also performed. Required tests include the blower door test, duct blaster, and visual inspections. The testing is conducted by a 3rd party. Required tests include the blower door test, duct blaster, Manual J and visual inspections. TEP originally used internal inspectors but has recently migrated to a contractor model because customers complained of "too many visits." Enabling the contractor to perform both the inspection and installation has facilitated a more seamless experience to customers and has also fallen in line with TEP's vision of having "knowledge embedded to contractors." Question 11: Program participation to date? Organization Q11: To date, how many participants have you had in your program since the program was started? 159 GDS Associates, Inc.

165 APS APS alone has audited 9000 homes and retrofitted However, the HPwES program in Arizona is led by a nonprofit organization that has facilitated a partnership between multiple utilites in the state and, as a result, has been able to amplify the results of the program. For example, the combined audits of APS and SRP sum up to around 16,000 while the total of all retrofitted homes is around 6,500. Fort Collins Utilities (FCU) 1100 audits. 500 improvements. Home Free Nevada 520 audits have been performed and 258 upgrades have been achieved since inception of the program. NYSERDA 45,421 Xcel Energy 300 NPC (Nevada Power Did not know Company Under Home Free Nevada) Rocky Mountain Power (RMP) When summing the participants of every state in the program (and utilizing the metric: 10 CFLs = 1 participant), RMP's program has witnessed 3 million participants. When ignoring the metric 10 CFL's = 1 participant, the number changes to 200,000 participants. Questar Gas Company 250,000 Utah Home Performance Audits: 2188, Upgrades: 1277 Tucson Electric Power Audits: 531, Measures installed: 419 (however, multiple measures may correspond to one participant). Question 12: Method for determining savings? Organization APS Fort Collins Utilities (FCU) Home Free Nevada NYSERDA Xcel Energy NPC (Nevada Power 160 GDS Associates, Inc. Q12: What method do you use to determine the energy savings from the HPwES program? Do you verify energy savings? If so, how? Do verify energy savings for 100% of participants or a sample? Deemed savings based on measurements. A test in and test out is performed for 100% of participants. However, quality assurance tests are only performed on 20% of the retrofits. Working on a way to determine savings. For a while REM/Rate energy modeling software was used to determine the energy savings. Home Free Nevada has recently switched to Optimizer software and hires a 3rd party to verify performance measurements for 5% of participants. TREAT computer modeling software and Real Home inauditor software is used to determine the energy savings. Savings are not verified. Deemed Savings Optimizer has its own calculations. Energy savings determined by 3rd party

166 Company Under Home Free Nevada) Rocky Mountain Power (RMP) Questar Gas Company Utah Home Performance Tucson Electric Power Energy savings are determined from calculations performed by vendors and 3rd party data. Savings are not verified. Published deemed savings numbers are used to determine the energy savings. Utah Home Performance uses OptiMiser software which has its own calculations based on building simulation. It took a while to get contractors trained to use the software, since there is such a high margin of error. Also, Jami did not know why she was using OptiMiser as opposed to an alternate approach to calculate savings. TEP hires a 3rd party to determine actual savings. The method used by the 3rd party is called "Math Sheets," which Mike describes as a "really complicated spreadsheet." The Math Sheets take into acount measurements such as the duct leakage reductions verified by the blower door test, utility usage data, and the market pricing of measures to calculate avoided costs. Question 13: Best practice recommendations? Organization APS Fort Collins Utilities (FCU) Home Free Nevada 161 GDS Associates, Inc. Q13: Based on your organization's experience with implementing a HPwES program, what would you say are "best practices" for a HPwES program in order to have a successful program? 1. Become contractor centric: contractors that are both auditors and installers enable the customer to a experience a seamless and convenient sale. 2. Giving the customer informational resources via software regarding the efficiency measures available. 3. Targeted Marketing: reaching the households that would benefit the most from retrofitting (eg. the most innefficent houses). 4. Flexibility in incentives (allowing small projects for customers that may not be able to afford upgrading multiple appliances at once). 6. Stay engaged after first measure is completed to win returning participants 7. Focus on a multi year relationship with participants (benefits both contractors and participants) Tried implementing an HPwES program with limited success. Switched to its own customized model that did not require as many changes to be made at once to households and saw a dramatic increase in participation. In FCU's model consumers are allowed to upgrade just one appliance if they desire, which has made the process much less financially daunting to consumers and has captured opportunities to upgrade expensive failed appliances. For example if a furnace or water heater has just failed, the consumer does not have the money to also focus on the shell FCU's system is more conducive to capturing participants in scenarios such as these. As a result, FCU has seen many repeat participants who upgrade 1 appliance at a time, earn more money, and upgrade another appliance at a later date. 1. Establishing an optimum price point for audits. For example, when Home Free Nevada's audit subsidy ended, the

167 corresponding spike in audit prices scared away many potential participants. However, when the subsidy was still active, the audit prices were so low that they encouraged "tire kickers" to take advantage of the offer leading to a high number of audits performed but a very low conversion rate (which hurt the contractors). The trick is to find the optimum audit price that is high enough to weed out the "tire kickers" but not so high that it alienates potential participants. Home Free Nevada has elected to price its audit at $199 based on studies it has reviewed. 2. Deciding whether to implement an Auditor, Contractor, or Hybrid model (Home Free Nevada still has not determined which model is the most effective) 3. Keep it simple for Homeowners (cut down on unecessary tests) NYSERDA 1. Good data collection upfront 2. Marketing and awareness campaign 3. Diverse network of contractors 4. Databases Xcel Energy Not a successful program yet just redesigned and waiting for 2013 scheduled evaluation. NPC (Nevada Power Implementing a credible QA/QC process that allows customers to trust contractors. Company Under Home Free Nevada) Rocky Mountain Power (RMP) Questar Gas Company Utah Home Performance Tucson Electric Power 1. Keeping it simple for contractors and participants 2. Constantly monitoring the price of materials and incentives. There was a time when incentives were too high and payed for more than the project was worth. 3. Conducting heavily regulated inspections, maintaining strict quality control, and documenting everything 1. Adequate funding 2. Get the word out 3. Brand all programs under 1 name 4. Generous incentives 1. Provide performance based incentives and perform rigorous QA. Adherence to strict QA will hurt program volume but will ensure the work is being done right. 2. At the end of the day it's always the contractor who is performing the installations and interacting with customers. Support your best contractors and bring your average contractors up to speed. 3. Focus on comfort when trying to sell energy efficiency. People value increased comfort and safety over a few dollars saved on energy bills. 4. Send your best salesmen to audit homeowners. "High tech" home audit software has proven to be overrated. When surveyed about their experience with the audits, customers reported they enjoyed the audit. However, when asked to elaborate, many consumers explained that they did not understand the savings information presented by the software, but rather, enjoyed interacting with the auditors. Therefore, it was the people who sold the improvements, not the actual improvements themselves that led homeowners to upgrade their homes. 162 GDS Associates, Inc.

168 Appendix D. Best Practice Review Findings GDS reviewed the following programs and resources: Arizona s Home Performance with ENERGY STAR Program Oncor s Home Performance with ENERGY STAR Program AEP Public Service Company of Oklahoma Homer Performance with ENERGY STAR Program The Building Performance Institute Home Performance Resource Center The New York Home Performance with ENERGY STAR Program The New Jersey Home Performance with ENERGY STAR Program Residential HVAC Quality Installation and Maintenance Homeowner Perspectives and Marketing McKinsey Global Energy and Materials U.S. Energy Efficiency Report EPA Energy Management Guidelines and Benchmarking Best Practices 163 GDS Associates, Inc.

169 Arizona s Home Performance with ENERGY STAR Program Arizona Home Performance with Energy Star Step 1: Find a contractor to schedule an assessment. Call Arizona Home Performance with Energy Star s hotline they will refer the participant to a BPI certified contractor. Step 2: For just $99, you re the contractor will conduct a complete home inspection and testing, including: Audit the A/C system, ductwork, insulation and building envelope and perform a blower door test Replace up to 10 incandescent light bulbs with energy efficient CFLs Install a low flow showerhead Install three low flow faucet aerators Provide you with a final comprehensive home assessment Step 3: Using the comprehensive home assessment report, you decide which upgrades make the most sense to pursue. Your contractor can help you consider which rebates or financing offers are available to help you get the most for your money. Neither the program nor contractors pressure you to complete upgrades and only provide you with the information to make your decision. Step 4: Contractor will perform the upgrades you decide on, and assist you with applying for rebates from your utility. You may qualify for rebates that cover up to 75% of the cost of the upgrades. In addition, some measures may qualify for federal tax credits. Financing is also available for qualifying home improvement projects to your home. Home Energy Upgrades Once your home energy check up has been completed by a Home Performance with ENERGY STAR contractor, you will receive a comprehensive home assessment a list of suggested energy efficiency upgrades that will make you more comfortable while saving money. Common upgrades may include: Sealing Ductwork On average, almost 15 percent of cooling energy is wasted due to duct leakage. This can result in hot and uncomfortable rooms regardless of the thermostat setting. Your Home Performance contractor may recommend sealing your home s ducts with mastic or spray on sealant, and balancing the duct system to optimize air flow to all rooms. Insulating ductwork will also help to ensure that your home will be more comfortable and that you are getting every dollar out of your heating and cooling equipment. Sealing Air Leaks Air leaks are not just in windows and doors. Most homes are full of hidden holes that let outside air in, conditioned air out and can negatively impact the performance of your insulation. In Arizona, leaks in your attic from plumbing penetrations, electric wires, light fixtures, and other holes often represent significant energy losses. Sealing these air leaks is a critical step to improving the overall efficiency and comfort of your home. Repairing or Adding Insulation For insulation to be effective, it must be installed properly. To achieve maximum performance, insulation must be installed in the right location and without gaps, voids or compressions. Your Home Performance contractor may recommend repairs to existing insulation or adding insulation when needed. Combined with sealing air leaks, properly installed insulation in attics, walls, and crawlspaces provides for more even temperatures throughout the house and results in a quieter, more comfortable living environment. 164 GDS Associates, Inc.

170 Shade Screens There are many ways to improve the performance of your windows and block the sun s rays during hot Arizona summers. Shade screens offer an affordable solution that blocks up to 70% of the solar heat gain through your windows. Improve HVAC Efficiency If your air conditioner is more than 10 years old, your Home Performance contractor may recommend that you replace it with high efficiency equipment that has earned the ENERGY STAR label. Installed correctly, these units can save up to 20 percent on heating and cooling costs. Make sure to insist on a quality installation of your cooling equipment, in particular. Studies show that half of all central air conditioners in U.S. homes never perform to their advertised capacity and efficiency due to incorrect installation. Upgrading Lighting and Appliances Energy used for lighting and appliances can account for half of your home's total utility bill. As a result, your Home Performance contractor may recommend ENERGY STAR qualified products, such as refrigerators, dishwashers, electronic equipment, light fixtures, and compact fluorescent bulbs. An energy and water efficient hot water heating system may also be recommended. A combination of any of these measures will help maximize your home s efficiency. Once you ve taken these steps, consider adding renewable energy such as solar photovoltaic or solar hot water to further reduce your energy bills. Home Performance with ENERGY STAR Rebates Customers who sign up for a $99 comprehensive home assessment gain access to special rebates through their Home Performance with ENERGY STAR contractor. These rebates include: Sealing Air Leaks APS offers rebates up to $250 for air sealing that reduces infiltration and improves insulation's performance. Improving/Adding Insulation APS offers rebates up to $250 to upgrade attic insulation to R 30 when the existing insulation has a performing R value of less than R 19. In order to qualify to insulation rebates, customers must seal air leaks first to ensure maximum insulation performance. Sealing Ductwork APS offers up to $250 to seal and repair leaks in their heating and cooling duct system. Shade Screens Customers can qualify for up to $250 in rebates for shade screens with a shading coefficient of 80% or greater on east, west and south facing windows Financing for Energy Efficiency Upgrades Home Energy Efficiency Financing from National Bank of Arizona National Bank of Arizona has partnered with the APS Home Performance with ENERGY STAR program to offer low, fixed rate financing for energy saving home improvement projects 1. Get Financing for Your Energy Saving Home Improvement Project Schedule your $99 comprehensive home checkup and work with a qualified contractor 2 to identify potential improvements to your home. Work with a qualified contractor to make recommended improvements 2. See how you may qualify for additional APS rebates. Finance the whole project with no up front cost and low fixed APR 3 not to exceed 7.99% 4. After your energy audit is completed, apply for financing by calling Credit approval required 2. Upgrades must be performed by a participating contractor 165 GDS Associates, Inc.

171 3. Annual Percentage Rate 4. Program terms and conditions subject to change without notice Financing may include health and safety based measures directly required for the installation of energy efficiency measures. 166 GDS Associates, Inc.

172 Oncor s Home Performance with ENERGY STAR Program Oncor s Home Performance with ENERGY STAR What is Home Performance with ENERGY STAR? Home Performance with ENERGY STAR provides a comprehensive, whole house approach to making your home more comfortable, reducing its energy use, improving indoor air quality, and creating a healthier home for your family. Rather than focusing on a single problem, like an old heating or cooling system, not enough insulation, or leaky windows, Home Performance with ENERGY STAR looks at your house as a system and how improvements throughout your home can work together to give you the best results. The program works when you contact a certified contractor to visit your home for an initial evaluation and then make recommendations that will improve the energy efficiency of your home. Recommendations are based on the best available building science practices for estimating costeffective improvements, and follow the Home Performance with ENERGY STAR process, a process backed by the U.S. Environmental Protection Agency and U.S. Department of Energy. After this initial evaluation, your contractor will prepare a detailed work proposal outlining the recommended improvements and recommend eligible measures that qualify for incentives. Once you decide on the improvements that you want to make, your contractor will help you get the work done quickly and correctly. Additionally, Oncor provides cash incentives for qualified energy saving home improvements. Contact a certified contractor today to take advantage of incentives only available through September 30, 2012, or until funds are depleted. Typical Home improvements: Sealing air leaks and adding insulation Air leaks, like those in attics, around chimneys, and through recessed lighting fixtures, are a significant source of energy loss in a home. In total, the number of air leaks in your home can easily add up to the equivalent of leaving a door open. Sealing air leaks is critical to improving the overall efficiency of your home and will make your HVAC equipment perform better. It will also make your house less drafty and more comfortable. Along with air sealing, your contractor may recommend that you add insulation. Many older homes are not well insulated, and some have no insulation at all. Properly installed insulation in attics, walls, and floors provides for more even temperatures throughout the house and results in a quieter, more comfortable living environment that is easier and less costly to heat and cool. Sealing and insulating ductwork Many homes have leaky ductwork and poor air flow, resulting in uncomfortable rooms regardless of the thermostat setting. Your contractor may recommend sealing your home s ducts with mastic, and balancing the duct system to optimize air flow to all rooms. Insulating ductwork in attics and crawlspaces also can reduce energy usage and increase your home s overall comfort Improving heating and cooling systems If your heat pump, furnace, or air conditioner is more than 10 years old, your contractor may recommend replacing it with a unit that is ENERGY STAR qualified and is properly sized. Installed 167 GDS Associates, Inc.

173 correctly, high efficiency units can help you save on heating and cooling costs. A properly sized unit will make your home more comfortable year round by providing more consistent temperatures and better humidity control regardless of changing outdoor temperatures. Fixing your combustion equipment If the contractor finds that your combustion equipment, such as your furnace or water heater, is not operating and venting properly, they will make the recommendations needed to ensure the safety of your home. Upgrading lighting and appliances Energy used for lighting and appliances can account for half of your home s total energy consumption. As a result, your contractor may recommend ENERGY STAR qualified products, such as refrigerators, clothes washers, dishwashers, and compact fluorescent light bulbs. Eligible Improvements After a home performance evaluation, the contactor will recommend a variety of energy efficiency improvements for your home. To be eligible for incentives from Oncor, your home must meet certain requirements. Below is the list of potential energy improvements a contractor may recommend following the evaluation of your home. Heating and Cooling Water Heaters & Hot Water Savings Measures Air distribution system correction Electric water heater Air source heat pump Heat pump water heater Central air conditioner Water heater tank wrap Duct sealing and/or replacement Hot water pipe wrap High efficiency gas water heater Building Shell Attic insulation Wall insulation Floor insulation Duct insulation Air sealing Solar screens (west facing glass) Energy efficient windows Special Offers and Rebates from ENERGY STAR Partners To encourage customers to buy energy efficient products, ENERGY STAR partners occasionally sponsor special offers, such as sales tax exemptions or credits, or rebates on qualified products. Partners also occasionally sponsor recycling incentives for the proper disposal of old products. The search below is provided as a service to consumers to find such special offers or rebates where they exist, based on information that partners submit to ENERGY STAR. Enter your zip code below to find out if there are any special offers or rebates currently available on ENERGY STAR qualified products in your area. NOTE: This is the process for Oncor customers to acquire rebates or financial incentives for the products listed above. 168 GDS Associates, Inc.

174 AEP Public Service Company of Oklahoma Home Performance with ENERGY STAR Program AEP Public Service Company of Oklahoma Public Service Company of Oklahoma Home Performance with ENERGY STAR 2012 Special Incentive Schedule pdf How it works as easy as A, B, C. Assess your home's energy efficiency with a home energy assessment Button Up with home improvements that will lower your energy bills Cash Back the more energy you save, the higher the incentive up to $4,250 Assess Your Needs Your first step is a comprehensive energy assessment. Contact an energy solution expert from our list of participating contractors to perform a home energy assessment and learn more. The assessment will be performed by a contractor certified by the Building Performance Institute, the national technical certification organization for the Home Performance industry. The contractor will use diagnostic tools to pinpoint air leakage and other sources which waste energy and often create comfort issues that are unique to your home. Air infiltration testing to assess air leakage from your home s building shell Duct blaster testing to assess the amount of air leakage in your air conditioning and heating system Combustion safety testing to ensure that appliances, such as your kitchen stove, are operating and venting properly Your contractor will review the assessment report with you, which will provide a customized path to energy savings that may include air sealing, insulation, heating and cooling system replacement, windows, doors, or other efficiency upgrades for your home. Button Up Once your assessment is completed, you and your contractor will select the path that is best suited for your home, either a "Standard" path or a "Performance" path to savings and incentives. The "Standard" path consists of a menu of energy solutions with corresponding incentives. Each measure in the standard path is capped at the rebate amount up to 20 percent of the total cost. The total rebate paid to the customer under the standard path is capped at $1,800. NOTE: Though you're eligible to receive a standard rebate for making individual upgrades such as replacing your 15 year old heating and cooling system, you may find that by making one or two additional upgrades such as air sealing or adding some insulation you may qualify for the larger "performance" incentives starting at $3,000. Ask your contractor to discuss these options with you. The "Performance" path calculates your incentive according to the overall savings projected using modeling software. For example, if the assessment projects that a homeowner could save 35 percent by insulating and sealing the attic, walls and upgrading heating and cooling equipment they are eligible for up to a $6,000 incentive. If the homeowner implements projected energy saving solutions that save GDS Associates, Inc.

175 percent, they are eligible for up to an $4,000 incentive. The table below outlines the incentives available for achieving different levels of energy savings. All performance path incentives are capped at 50 percent of the total installed cost or to the incentive level indicated below, whichever is lower. All homeowners are eligible for a $250 rebate on their energy assessment, as long as they install a minimum of $500 in energy saving improvements within six months of the assessment. Cash Back Here's an example of how it works, which will demonstrate the difference between the standard and performance paths. Let s say a homeowner has an energy assessment which identifies several opportunities to save energy, such as duct and air sealing, attic insulation and new heating and cooling equipment. If the homeowner is not ready to implement all the recommendations made, they can choose the standard path. In the example below the homeowner decided to move ahead with attic insulation (cost $2,000). The homeowner would be eligible for an incentive of $400 for the insulation, and an incentive of $250 for the energy assessment. So if the total job cost $2,250, and incentives were $650, the out of pocket cost would be $1,600. Now let s say the homeowner decided to invest in additional solutions recommended in their home energy assessment, in order to save even more on their energy bills. The contractor has projected that if all the recommendations were made, they would achieve an overall energy savings of 35 percent. This is the "performance path because it is based on how your home will perform once the improvements are made. While the total project would cost the homeowner $9,250, almost half of that would come back to them in the form of a rebate $4,250!! That's a great deal! Home Performance is geared to reward taking the kind of action that generates the most energy savings. PSO s contractors and assessment mentors have been trained to walk through every step of the program with the homeowner to help them understand their home and the opportunities to save. Each homeowner will deal with an energy expert to review the budget, energy and comfort concerns and issues specific to their home to learn how much money can be saved in incentives, as well as, long term on monthly utility bills. Typical Home Improvements Your home energy assessment will identify energy improvements specific for your home. In addition to the specific plan your Home Performance contractor will prepare for your home, commonly recommended improvements for an energy efficient home include: Sealing air leaks and adding insulation Along with sealing air leaks which may be allowing cold or hot air to escape or penetrate your home's envelope, your contractor may recommend insulation. Many older homes are poorly insulated, and some have no insulation at all. Properly installed insulation in attics, walls, and floors provides for more even temperatures throughout the house and results in a quieter, more comfortable living environment that is less costly to heat and cool. Sealing and insulating ductwork Regardless of the thermostat setting, many homes have leaky ductwork and poor air flow, resulting in uncomfortable rooms. Your contractor may recommend sealing your home s ducts with mastic (air duct sealant), and balancing the duct system to optimize air flow to all rooms. Insulating ductwork in attics and crawl spaces also can reduce energy usage and increase your home s overall comfort. Improving heating and cooling systems If your heat pump, furnace, or air conditioner is more than 10 years old, your contractor may recommend replacing it with a unit that is ENERGY STAR qualified and properly sized. Installed correctly, high efficiency units can help you save on heating and cooling costs. Such a unit will make 170 GDS Associates, Inc.

176 your home more comfortable year round by providing more consistent temperatures and better humidity control regardless of changing outdoor temperatures. Fixing your combustion equipment Your contractor should also test the combustion equipment in your home, such as your furnace and hot water heater, to ensure that it operates and vents properly. In addition, the contractor should conduct a carbon monoxide test reading on ovens and other areas to further test the safety of your home. Upgrading lighting and appliances Energy used for lighting and appliances can account for half of your home's total energy consumption. As a result, your Home Performance Contractor may recommend ENERGY STAR qualified products, such as refrigerators, freezers, clothes washers, dishwashers, dehumidifiers, room air conditioners, and compact fluorescent light bulbs. An energy efficient hot water heating system may also be recommended. Incentive Paths Home Performance with ENERGY STAR Standard Measures Path Measure List for Standard Path 1 Incentive Amount Energy Assessment 2 $250 Compact Fluorescent Lights (CFLs) $1 per CFL, up to 20 for a $20 total Gas Heat: R Value added * square footage * $ Attic/Ceiling Insulation Electric Heat: R Value added * square footage * $0.015 Wall, Knee Wall, and Crawl Space Insulation Solar Screens Solar Film Radiant Barrier Water Heater Tank Wrap (electric only) ENERGY STAR Windows Air Sealing Duct Sealing Duct Replacement Central Air Conditioner Heat Pump Replacement (split or packaged systems) Home Performance with ENERGY STAR Performance Measures Path 171 GDS Associates, Inc. Gas Heat: Exterior wall area * $0.25 Electric Heat: Exterior wall area * $0.55 $0.70 per square foot $0.70 per square foot $0.15 per square foot $20 per unit, maximum of $40 $2 per square foot up to a maximum of $400 Cubic feet per minute (CFM) reduction * $0.15 (maximum 50 percent of cost or $500, whichever is lower) Gas Heat: $0.15 per square foot Electric Heat: $0.20 per square foot Gas Heat: $1.50 per linear foot Electric Heat: $1.75 per linear foot From $120 to $720. Varies per unit type, according to Seasonal Energy Efficiency Ratio (SEER) level and size in tons

177 Measure List for Performance Path 3,4 Incentive Amount Energy Assessment 2 $250 Home Performance 20% Energy Reduction $1,500 Home Performance 25% Energy Reduction $2,000 Home Performance 30% Energy Reduction $2,500 Home Performance 35% Energy Reduction $3,000 Home Performance 40% Energy Reduction $3,500 Home Performance 45% Energy Reduction $4,000 Home Performance with ENERGY STAR incentives are subject to available funds. PSO reserves the right to change or end any portion of this program without notice. Homeowner and contractor must choose either the Standard Path or Performance Path for the entire project. 1 Total Standard Measures Path incentive is capped at $1, A $250 Comprehensive Energy Assessment incentive is applicable only if a resulting Home Performance with ENERGY STAR project is completed within six months of the assessment and cost of the installed measure(s) is equal to or greater than $500. All customer incentives are paid at project completion. 3 The Performance Path is capped at 50 percent of the total installed cost or at the incentive level indicated above, whichever is lower. 4 Measures installed for the Performance Path must be selected from the Standard Path measure list. To calculate the total incentive, the homeowner and contractor must choose either the Standard Path or the Performance Path. 172 GDS Associates, Inc.

178 The Building Performance Institute The Building Performance Institute (BPI) lists good practices and suggestions for contractors who are involved in HPwES projects 44 : Educate Customers on Whole House Offer Comprehensive Solutions Get Key Staff Trained & Certified Follow BPI Standards in Your Work Last Do No Harm by testing out Participate in Independent, Third Party Quality Assurance Program The BPI also lists key drivers for homeowners and contractors to participate in home performance. Drivers for Homeowners: Dust and allergies Comfort issues (e.g., drafts, hot or cold rooms) High utility bills Hazardous materials (e.g., asbestos) Moisture (e.g., wet basements, mold) Climate change (i.e., carbon footprint) Drivers for Contractors: Brand recognition/differentiation Access to education Access to business training Access to marketing outreach Independent, 3 rd party quality assurance Feedback on best practices The primary driver for some home owners is to improve the health, comfort, and safety of their residence. It is important to emphasize the non energy benefits of HPwES improvements 44 Zarker, Larry and Adolf, Tiger. Comparison of Utility Energy Efficiency Programs Building Performance Institute. 173 GDS Associates, Inc.

179 when marketing and advertising, because some homeowners may not be aware that a wholehouse assessment can uncover their home s performance problems. Several strategies exist to increase customer awareness; one innovative strategy to increase consumer awareness and demonstrate the benefits of the whole house approach to energy efficiency is a Home Energy Makeover Contest. The home, chosen for its inefficiency, produces dramatic energy savings and works as a good marketing promotion. The leading HPwES Programs have developed a variety of ways in which to recruit, reward, support, and recognize contractors. These activities include providing contractor incentives to encourage contractor training. The most successful programs have also realized the importance of devoting time and resources to recruiting appropriate contractors into the program, who have the necessary vision to be willing to invest in the HPwES concept, and may already be active in promoting energy efficiency. The most successful HPwES contractors are those that view this as a viable business opportunity and are experienced in selling premium efficiency or renewable technologies. Along with offering a six day diagnostic and remediation training session (includes two days in the field), and post training one on one field mentoring to contractors, the California Home Performance with ENERGY STAR Program also offers a oneday business and marketing session where Contractors learn how to perform their own marketing and outreach to past and potential new customers. Programs should focus on contractors as an integral part of program success, and enhance contractor capability by ensuring that they are well equipped for program delivery. Some examples are: Improve equipment accessibility: Provide a means to rent costly diagnostic equipment. Contractor program liaisons: Provide a program administrator specifically for contractors to call. Facilitate permitting process for homeowner: Provide the name of a building department planning person within each municipality who is familiar with the types of installations that will take place as part of the program. Link contractors to utilities: To increase contractor credibility with homeowners, link the utility company to the sponsoring municipality or program, and the list of eligible contractors. Allow contractors to build their own customer base: Provide contractors with information based on market research about which homeowners to target with their marketing efforts. 174 GDS Associates, Inc.

180 Subsidize contractor marketing efforts: Provide contractors with program materials and/or subsidize contractors personal marketing efforts. 45 Successful programs incorporate contractor recruiting strategies and marketing, support the contractors, and build customer awareness. Programs operating in Oregon, Vermont, Maine, New York, and New Jersey offer a variety of contractor marketing support. Some common strategies including offering co op marketing and contractor support, website support and tieins to EPA campaigns, media radio spots, print media ads, and Internet keyword search. Some savvy HPwES contractors have learned to leverage these marketing activities to build their own contractor business. Contractors can provide customers with Energy Savings certificates after the project is completed as a way to further reinforce the energy efficiency message or piggyback their advertising with the HPwES Program advertising. Contractors can also do targeted telemarketing in the neighborhoods where they are already performing home assessments and making home improvements. Along with training, contractors have the opportunity for mentoring, which provides contractors with direct experience performing diagnostic tests, making recommendations, developing a scope of work and installing improvements to best practice standards. 45 Community Based Social Marketing to Inform Homeowner Participation in California Energy Efficiency Home Improvement Programs Action Research, Inc. July GDS Associates, Inc.

181 Home Performance Resource Center Three HPwES Programs were reviewed by the Home Performance Resource Center for an examination of best practices, and a summary of their findings are presented below. The reviewed programs are managed by the New York State Energy Research and Development Authority (NYSERDA), Austin Energy, and the New Jersey (NJ) Board of Public Utilities Office of Clean Energy, which contracts with Honeywell Utility Solutions. 46 Best Practice Provide easy and affordable pathways for homeowners to get involved with the program, with significantly higher benefits for deep whole house retrofits Leverage established brands (such as ENERGY STAR ) and existing utilitycustomer relationships to enhance marketing and outreach efforts Use paid advertising if sufficient marketing funds are available, and look to co op marketing strategies to extend the reach of program investments Coordinate with local businesses and training programs to expand the local contractor pool as demand for retrofit services grows Support industry growth and allow companies to form relationships with customers Involve local contractors at all stages of program design and implementation Stimulate industry capacity by offering subsidies for training, equipment and marketing Focus marketing, contractor recruitment and training based on an assessment of industry capacity and the existing customer base Encourage retrofits, not just audits, and support an integrated contractor model Work closely from the start with private sector participants and solicit their feedback regularly Plan for sufficient staffing and efficient administrative processes to avoid delays in payment Collect data, analyze and adjust Develop a system for third party verification and quality assurance Case Study NJ Austin Energy NYSERDA Austin Energy NYSERDA Austin Energy NJ NJ NYSERDA NYSERDA NJ NYSERDA Austin Energy 46 Best Practices for Energy Retrofit Program Design: White Paper Home Performance Resource Center GDS Associates, Inc.

182 The New York Home Performance with ENERGY STAR Program The New York Home Performance with ENERGY STAR program is managed by the New York State Energy Research and Development Authority (NYSERDA). The program provides homeowners with the choice of two low interest financing options: Energy $mart Loans offered through a network of third party lenders, or ENERGY STAR Financing offered in association with Energy Finance Solutions(EFS). The NYSERDA Program also stresses the importance of contractor relationships and agreements. Although not desired, contractor disputes may arise. Recognize the importance of rules, standard, and language in any agreements between the utility and contractors. Very clear contract language can serve as a safety net for both parties in case of future disputes or transgressions. The partnership agreement between contractors and the Program establishes the terms and conditions for participation in the program. Reading and understanding this agreement is important so that expectations are clear and both parties can accomplish their goals. 47 Clearly demonstrate what benefits that a contractor can receive by becoming a partner 48, such as Savings on certification, accreditation, and training References on the Utility s web site Availability consumer financing options and incentives Use marketing materials Referrals/leads from large scale public awareness campaigns In best practices, it is critical to have clear requirements for certification and training. The Building Performance Institute, Inc (BPI) states that a certified professional should be comprehensively trained. It is critical to have a signed agreement before beginning work in the program Another important piece of the contractor and program partnership is Quality Assurance/Quality Control. Quality control can confirm that projects have met all Program requirements and at the same time, ensure healthy and safe living conditions exist for the occupants. In the NYSERDA Program, 15% or more of all projects receive a field QA inspection. Projects are selected on a random basis and at the request of the homeowner. Contractors should not inhibit or discourage homeowners from participating in the Program QA and such activity could result in disciplinary action. 47 Munro, David. Litigation Avoid If Possible! NYSERDA s Home Performance with ENERGY STAR Contracts Best Practices. 48 Prior, Dave. Best Practices for Participating Home Performance with ENERGY STAR Contractors 177 GDS Associates, Inc.

183 The New Jersey Home Performance with ENERGY STAR Program The program has been successful at stimulating growth in the Home Performance industry. More than 60 contractors were actively engaged in program retrofit work in 2009 and early 2010, and as of as of March 15, 2010, the program had recruited a total of 135 participating contractors. The program has also stimulated industry growth by offering various subsidies for training, equipment purchases and marketing. Importantly, after a year of participation, many of the subsidies are only available to companies who complete at least 10 jobs per year, which helps ensure that program funding is not being wasted. Increases in energy consumption can be mitigated by (1) mandatory codes and standards, which include Federal equipment standards, state building energy codes and equipment standards, and local building energy codes; (2) Participation in voluntary programs, such as ENERGY STAR appliances, homes, and buildings, as well as new green building programs and designations such as LEED and MASCO Environments for Living; and (3) Policies and incentives such as Federal and state tax credits, utility rebates and pricing structures, and governmentbacked research to develop energy efficient technologies Best Practices for Energy Retrofit Program Design: Case Study New Jersey Home Performance Resource Center GDS Associates, Inc.

184 Residential HVAC Quality Installation & Maintenance Best practice for energy efficiency programs is rapidly evolving toward a focus on proper sizing, installation, charge and airflow for both new and existing systems. There are substantial energy efficiency and peak demand reduction opportunities associated both with the sizing and installation of new central AC systems, as well as with ensuring proper maintenance of existing systems. Improper sizing, improper refrigerant charge, improper airflow over the indoor coil and air duct leakage are often common problems that reduce AC efficiency. In Texas, Oncor established an Air Conditioning Installer Program, which achieved a peak demand reduction of over 9,000 kw and electricity savings of over 12,000 MWh in Oncor provides technician training on proper installation practices for air conditioning and duct systems and small installer incentives are offered to offset additional labor and materials costs associated with a quality installation project. After a third party verification confirms that the installations meet program specifications, the homeowner receives a High Performance Installation certificate. HVAC improvements have a cost effectiveness of $ /kWh, slightly lower than overall HPwES Programs, but HVAC improvements also have a lower demand reduction than a whole house HPwES upgrade. 50 Oncor states that their air conditioning equipment shall be properly sized to dwelling based on ASHRAE or ACCA Manual J standards. 51 Currently their high performance A/C installations must: Meet ENERGY STAR standards Air conditioners must have a SEER of 14.5 and an EER of 12 or higher Heat pumps must have a SEER of 14.5 and an EER of 12 or higher with a minimum of 8.2 HSPF 52 These standards have been raised from the 2006 standards of a minimum ARI listed SEER rating of and minimum manufacturer rated EER of Some contractor partnerships have even higher standards, such as the 2011 Robert Madden Industries/ Oncor Residential Customer Incentive Program. Robert Madden Industries administers the program and pays incentives directly to eligible homeowners. Contractors are required to complete Manual J sizing or equivalent, and the equipment must meet the following minimum standards 50 U.S. Environmental Protection Agency. Clean Energy Options for Addressing High Electric Demand Days. September performance ac installation 179 GDS Associates, Inc.

185 Air Conditioning Systems, Residential Replacement Installations. Qualifying air conditioning systems must be AHRI matched, between 1.5 and 5 tons, and must be 16 SEER and 12 EER or greater Heat Pump Systems, Residential Replacement Installations. Qualifying heat pump systems must be AHRI matched, between 1.5 and 5 tons, 16 SEER, 12 EER and 8.2 HSPF or greater. Geothermal Systems, Residential Replacement Installations. Qualifying geothermal systems must be AHRI rated, between 1.5 and 5 tons and must meet or exceed the applicable minimum equipment specification: (i) Open Loop systems: 16.2 EER and 3.6 COP; (ii) Closed Loop Systems: 14.1 EER and 3.3 COP; or (iii) Direct Expansion: 15 EER and 3.5 COP GDS Associates, Inc.

186 Homeowner Perspectives and Marketing Action Research conducted extensive surveys, research, and focus groups in California to learn more about the homeowner perspective on participating in energy efficiency programs. A summary of the findings are shown in the following sections. One highlight of their research was that the decision to participate in an energy efficiency home improvement program is a complex, elaborated decision. The decision to engage in many energy efficiency actions is determined by a combination of social, contextual, and psychological factors. Consistently, homeowners expressed the need to take time to review, process, and weigh the costs and benefits of their decisions. Participants strongly emphasized the need to do careful research before taking any steps. They also found that people are generally interested in improving the energy efficiency of their homes, but they experience a range of barriers in completing projects. The focus group discussions indicated that participants had a variety of concerns about their homes, including considerations of structural integrity, safety, health, and comfort. However, homeowners typically use a band aid approach in addressing concerns in their home. Taking care of everything at once is typically not seen as an option primarily because of cost. Instead, issues are addressed only when they become chronic or when the homeowner experiences acute pain (e.g., high bills or discomfort). 54 Barriers to Participation: Cost is a dominant barrier to participation, including up front costs and confusion about returnon investment. People were positive about the whole house approach, but despite their interest, tackling numerous issues within the home at a single time was generally seen as cost prohibitive. Most focus group participants felt they needed to wait for economic recovery before moving forward with plans to improve their homes. Upfront costs need to be low, and although rebates help to alleviate overall project costs, they do not remove up front cost barriers for homeowners. Action Research found that the most successful programs were those that had little to no up front costs. Homeowners are often confused or uncertain about the return on investment. They are concerned with what they were getting from an investment in energy efficiency upgrades. Financial gains were not well understood, and there was considerable skepticism about the ability to reduce monthly costs. 54 Community Based Social Marketing to Inform Homeowner Participation in California Energy Efficiency Home Improvement Programs Action Research, Inc. July GDS Associates, Inc.

187 Despite a strong general interest by people to engage in these programs, they are often cost prohibitive. In today s economy, people are reluctant to take on additional debt. Action Research recommends that programs strive to reduce total project costs, out of pocket, and upfront costs as much as possible (in that order). Similarly, individuals are more receptive to reduced total costs or rebates, than to incurring additional debt. Programs should be simple but flexible for homeowners. Complicated programs and messages tend to discourage homeowners. Overwhelmed or confused homeowners do not often participate. Programs should also be flexible because homeowners who are involved in determining their energy efficiency measures are more likely to stick with the program. Contractors suggested that homeowners should be provided with a road map of the measures and processes that will take them to project completion. And some contractors noted that moving forward with a project is more likely to happen if the homeowner feels some control over the process. Finally, contractors stated that homeowners feel less like they are being sold if they are told which measures should be done now and in combination with each other, and which measures can be done at a later date. Programs also have to tackle the barrier of knowledge and awareness. People are often unaware of what actions are most effective in reducing energy consumption. Program directors believe homeowners lack an understanding of energy efficiency and are unfamiliar with home performance in general. Contractors believe that consumers are confused about energy efficiency and do not have access to information that allows for comprehensive comparisons about energy use and product purchases. Homeowners distrust of contractors and keeping homeowners engaged throughout project implementation can be significant obstacles to program delivery. Programs should promote contractor credentials and certification to decrease fears and increase contractor credibility. Successes were made possible through participant follow up and program evaluation. 55 Motivations and Benefits that Influence Participation: Comfort, high utility bills, and health concerns are tipping points for people to make contact with an energy efficiency program. Saving money or addressing comfort and health issues were the most commonly stated reasons for contacting a program. Return on investment is more than just dollars and cents, return on investment (ROI) can be defined by a combination of social, economic, and physical context that may also 55 Community Based Social Marketing to Inform Homeowner Participation in California Energy Efficiency Home Improvement Programs Action Research, Inc. July GDS Associates, Inc.

188 include symbolic elements. In the focus groups, participants stated that return oninvestment also includes increased comfort or a quieter home. In general, participants were positive about the whole house approach and described a number of global outcomes such as peace of mind, increased quality of life, and home performance metrics. Incentives for energy efficiency projects were perceived positively as long as they are guaranteed and simple. In the focus groups, participants primary concern about rebates was a fear that funds would run out or that the program would be cancelled. But, as long as paperwork was simple and people ultimately got their money the participants were happy. When marketing, the program should highlight motivations for action. While costs are clearly a barrier, home energy efficiency measures are viewed by homeowners as more than just an economic return on investment. In deciding to pursue energy efficiency measures, homeowners also consider issues of comfort, noise, health, safety, and community perceptions. For example, new windows can reduce energy costs, but they are also easier to operate, are more aesthetically appealing, and help to regulate the home temperature. In addition to cost savings, homeowners give weight to these hedonic elements. 56 Communication and Messaging: Participants believe their first contact with energy efficiency programs should give them the information they need to do some research and legitimize the program. Program messages are best presented through in person, or through self paced written presentations like brochures or web content. In general, people want to know (a) how much the program was going to cost, (b) how they could save money, and (c) how they could save energy. People want time to research and think but it is important to follow up often. Across all types of communication, Action Research found that focus group participants want to hear accurate information from sources that are not directly benefiting from the message. Messages regarding the potential for lower utility bills were perceived positively if they were coming from a local utility company or the city. Contractors were also seen as credible messengers if they were already engaged in an appliance replacement or remodel with the homeowner. Target Audiences for Energy Efficiency Programs and Marketing Approaches: Action Research found that the following groups of people were most likely to participate in energy efficiency improvements. 56 Ibid. 183 GDS Associates, Inc.

189 People who are already engaged in energy efficiency improvements and behaviors Participants were highly motivated to incorporate energy efficiency options into existing projects. Participants were most positive about opportunities to include energyefficiency retrofits into planned remodels and HVAC replacements. They stated that a trusted established relationship with a contractor would be a good segue to program participation. People who are buying a house, particularly one that they plan to settle into long term. People are more willing to make changes to a house they plan to stay in for the rest of their life. This was echoed in the telephone survey where participants reported buying a home as a point where they would be amenable to an energy efficiency home improvement project People who participate in energy efficiency home improvement programs tend to be older, have higher incomes, have older homes, and have no children living at home. Program directors and contractors found that homeowners who participate in energyefficiency home improvement programs are two income families, have no children in the home, have an above moderate income level, and are older. People taking energyefficient actions had significantly older homes than people who did not, but there were no other differences by key demographics. Energy efficiency home improvement programs should target individuals who are already interested and engaged in energy efficiency behaviors. This approach also allows for more oneon one contact, through existing channels like contractors, retail sites, and realtors. Find out what behaviors people are looking to do and make it easier for them to engage in those behaviors. Participate in existing outreach opportunities such as home shows, community fairs, and homeimprovement workshops that draw consumers who are already looking to do something in their home. Similarly, initiate relationships with home improvement retail establishments to reach homeowners as they make changes to their homes. Provide contractors with program materials and training that will help them convert individual homeowner repairs such as a remodel or HVAC replacement into a more comprehensive energy efficiency improvement. To reduce the likelihood that homeowners will feel that they are faced with an up sell, contractors should be provided with materials that have a consistent look and feel, and that are branded with utility and/or municipality logos. Focus on specific behaviors. General messages that address many different behaviors (e.g., improve home energy efficiency) are unlikely to produce behavior change because they do not give people a specific action to take. Broad campaign messages lack the specificity needed to 184 GDS Associates, Inc.

190 produce behavior change. However, such messages can be effective as overarching brands to raise awareness or build credibility for the program. Take advantage of personal and home lifecycle opportunities to engage homeowners. Home lifecycle opportunities would come with appliance replacement and the remodeling of aging homes. Personal lifecycle opportunities would come with purchasing a new home, when children leave the home, and at retirement. Develop partnerships with realty associations, MLS, and other real estate entities to promote energy efficient upgrades at time of purchase. Leverage in person outreach opportunities at senior centers, lifelong education programs, community colleges, and volunteer organizations to present program information to individuals who are settled in their final home Community Based Social Marketing to Inform Homeowner Participation in California Energy Efficiency Home Improvement Programs Action Research, Inc. July GDS Associates, Inc.

191 McKinsey Global Energy and Materials U.S. Energy Efficiency Report A research team from McKinsey & Company worked with leading companies, industry experts, government agencies, and environmental NGOs and developed a report on how to best pursue additional gains in energy efficiency within the U.S. economy. They assessed the barriers to achieve the energy efficiency potential, and surveyed possible solutions. A collection of findings on the residential sector are below. 1. Non low Income Homes As shown below, the existing non low income homes represent the largest potential to reduce energy use in the residential sector of the United States. Because older homes have significantly greater potential per household, they could be given highest retrofit priority. Homes built before 1940 have more than twice the potential per household than homes built after Sixty four percent of the retrofit opportunity resides in the 51 percent of homes built before Figure 3: End Use Energy, Avoided Consumption Diagram Source: EIA 2008 data, McKinsey Analysis. 58 Choi Granade, H., Creyts, J., Derkach, A. Unlocking Energy Efficiency in the U.S. Economy McKinsey Global Energy and Materials. July GDS Associates, Inc.

192 Solutions to address participation barriers include public awareness campaigns, voluntary standards, and home labeling. New innovative financing can reduce capital restraints on homeowners by tying loan payments to the property or utility meter, instead of the homeowner, and by assuring the cash flow from the investment is always positive to the home owner. Capital burdens can be reduced by having monthly energy savings > than the loan payment or PAYS programs (Pay As You Save), which ties the loan to the home instead of the homeowner. Some programs such as Long Island Green Homes ties loans to property taxes. Conventional forms of financing, such as energy efficient mortgages or home equity lines can also provide funding, but do not address many agency barriers and after 30 years of availability, they have not penetrated the market significantly. Historically, monetary incentives for energy assessments and upgrades to residential customers have come through tax incentives or rebates. 59 Building mandates can capture a large percentage of the potential, but are a greater intervention in the market. Authorities could require prescriptive or performance based improvements at the point of sale, during a major renovation, or over a specified interval. For example, the City of Berkeley, California s Residential Energy Conservation Ordinance (RECO) mandates minimum energy efficiency upgrades at the point of sale and major renovation. The program has grown to approximately 500 home upgrades annually at a typical cost of $400 to $1,300, which is paid by the home seller. Performance measurement and enforcement can be difficult due to changing ownership and resident behavior. Another barrier that must be met to capture energy savings is the limited availability of credible, whole house contractors. Most contractors generally specialize in a single construction procedure as opposed to whole building design. The contractor market is highly fragmented which can make it difficult for homeowners to identify which contractors perform relatively well compared to others and have the capabilities to complete the full retrofit. However, the growing HPwES Programs have helped to increase the BPI certified contractor base. 59 Choi Granade, H., Creyts, J., Derkach, A. Unlocking Energy Efficiency in the U.S. Economy McKinsey Global Energy and Materials. July GDS Associates, Inc.

193 Figure 4: Addressing Barriers in Non Low Income Homes 60 Post testing is important due to the inconsistent quality of installation and infrequent retrocommissioning of equipment can increase space conditioning costs by 20 to 30 percent. Experts estimate that contractors install some 90 percent of HVAC equipment and insulation suboptimally, reducing efficiency by percent. Improper use of programmable thermostats, such as overriding their programming to hold a constant temperature, can reduce or eliminate their savings that, in total, represent 12 percent of retrofit potential. In a home upgrade study conducted by Florida Solar Energy Center, the researchers noted that installation errors highlight the importance of post retrofit testing. In some cases, the renovation measures actually reduced energy efficiency, specifically when the duct leakage increased significantly, after incorrect installation Low Income Homes 60 Ibid. 61 McIlvaine, J., Sutherland, K., Schleith, K. Exploring Cost Effective, High Performance Residential Retrofits for Affordable Housing in the Hot Humid Climate Florida Solar Energy Center. August, GDS Associates, Inc.

194 The biggest barrier to low income sector is the capital concerns. Debt financing is often at high interest rates, especially for low income residents, and funding through cash savings is difficult with low income residents. A typical shell retrofit could cost $910 on average, which is roughly half of the household annual non core budget according to 2007 Bureau of Labor data. Figure 5: Addressing Barriers in Existing Low Income Homes The majority of the savings potential in low income homes is the building shell, which McKinsey determined to be 92%. The remaining 8% is attributed to energy savings in the HVAC systems. Solutions to cross the barriers in the low income residential sector include many of the approaches to non low income homes, however; McKinsey notes that scaling up WAP programs offer one of the best ways to approach overall energy efficiency in the low income sector due to the great potential in building shell measures. Per square foot, low income homes have a higher consumption and higher potential than other homes. 62 Low income Homes Other Homes 62 Choi Granade, H., Creyts, J., Derkach, A. Unlocking Energy Efficiency in the U.S. Economy McKinsey Global Energy and Materials. July GDS Associates, Inc.

195 Consumption (end use kbtus /sq. ft) 29, Potential (end use kbtus /sq. ft) Lighting and Major Appliances Major appliances include water heaters, refrigerators, freezers, clothes washers, clothes dryers, dishwashers, stoves, and ovens. Lighting and these major appliances accounts for approximately 30% of residential consumption and 11% of residential energy reduction potential. In this potential, approximately 96% could be achieved by new appliance/product replacement. This presents capital as the major barrier to implementation. However, lighting is the biggest contributor to potential, where capital costs are significantly lower than other appliances or products. Energy efficiency opportunities in lighting and major appliances 2020 Other barriers to capturing this potential are the lack of awareness and certainty of saving among consumers. Although consumers know about efficient appliances, they are far less clear about the potential monetary savings. Consumers also face perceived quality trade offs, where they hold often inaccurate ideas about the functionality or quality of the efficient device. This is seen often with CFLs; consumers often associate CFLs with a long payback period and lower quality. Another important barrier is supply chain availability. For example, the majority of water heaters fail before they are replaced, and over half are emergency replacements. 190 GDS Associates, Inc.

196 Consumers often depend on the contractor s current, available stock. When time and selection are more available, consumers are much more likely to choose energy efficient appliances. 63 Retailers as well as energy efficiency programs have a role in addressing barriers. Figure 6: Addressing Efficiency Barriers in Lighting and Major Appliances 63 Choi Granade, H., Creyts, J., Derkach, A. Unlocking Energy Efficiency in the U.S. Economy McKinsey Global Energy and Materials. July GDS Associates, Inc.

197 U.S. EPA Review of Appliance Recycling Programs According to the United States D.O.E, of the existing stock of refrigerators in U.S. homes, approximately 25 percent were manufactured before minimum efficiency standards took effect in Operating an appliance retirement and recycling program reduces energy consumption and peak demand and ensures that old models are not put back on the secondary market. As an extra benefit, programs are able to reduce emissions of ozone depleting substances and greenhouse gases by ensuring that the refrigerants and foams contained in appliances are properly removed and recycled/destroyed. New ENERGY STAR qualifying refrigerators use less energy than a 75 watt light bulb. The EPA states that promoting the retirement and recycling of old, inefficient refrigerators or freezers through a turn in incentive program is a straightforward model for achieving costeffective energy savings. Programs typically offer a turn in incentive and cost free pickup of the functioning older appliance. The average incentive is around $35 per appliance, though some programs have offered an incentive as high as $ National or regional appliance recycling company companies provide turnkey implementation services including eligibility verification, appointment scheduling, appliance pickup, recycling and disposal, and incentive processing. Some utilities stipulate disposal requirement, specifying that recycling contractors incinerate foam insulation to prevent the release of chlorofluorocarbons (CFCs). A best practice to ensure a high energy savings is to specify key eligibility criteria such as appliance size, age, and requirements that units are functioning at the time of pick up. Consumers should always be informed that they will be charged a fee to recycle equipment that is not functioning. Programs should also include a strong marketing and consumer education component emphasizing the cost of keeping a second refrigerator or freezer in the basement or garage, and the savings achieved by replacing primary refrigerators that were manufactured before Also, some programs work with major appliance retailers to offer an incentive for retirement and recycling of refrigerators when new appliances are delivered to ensure that older refrigerators do not become second refrigerators or are not sold through resale markets U.S. Environmental Protection Agency. Clean Energy Options for Addressing High Electric Demand Days. September Ibid. 192 GDS Associates, Inc.

198 The EPA notes that appliance recycling programs have shown declining cost effectiveness and peak demand impacts with time as the market is depleted. A recent review suggests that in the early years of a program, most participants will retire and not replace secondary models, while in later years of implementation a higher percentage of participants will replace primary equipment. Education and incentives to promote the purchase of ENERGY STAR qualifying new equipment are beneficial for HPwES Programs Ibid. 193 GDS Associates, Inc.

199 EPA Energy Management Guidelines and Benchmarking Best Practices According to the Energy Efficiency Roundtable, there are seven important guidelines for improving Energy Efficiency with ENERGY STAR Programs. The guidelines for successful energy management are: Make Commitment Assess Performance Set Goals Create Action Plan Implement Action Plan Evaluate Progress Recognize Achievement Parker, Paul. EPA Energy Management Guidelines and Benchmarking Best Practices. UBEES Benchmarking and Energy Efficiency Roundtable. October 27, GDS Associates, Inc.