elements of ratepayer-funded low-income programs affordable comfort may 2005 jacqueline berger,...

Elements of Ratepayer-FundedLow-Income Programs

Affordable Comfort May 2005

Jacqueline Berger, APPRISE IncorporatedSuzanne Harmelink, WI Energy Conservation Corp.

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Program Elements

1. Goals: what the program attempting to achieve

2. Program Manager: the organization that is responsible for managing the program

3. Eligibility: who can participate in the program4. Targeting: what are the characteristics of the

customers who the program is trying to reach

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Program Elements

5. Expenditure per home: how are expenditure levels set and reached

6. Measures: what are the energy-saving measures that are selected

7. Customer education: how are customers involved in the process of reducing energy usage

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Program Elements

8. Service delivery contractors: number and type of organization(s) used to provide service delivery

9. Service delivery procedures: system for delivering education and measures

10. Data manager: organization responsible for developing and maintaining database

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Program Elements

11. Data management systems: system for collection and managing customer and program data

12. Quality control: procedures for assessing the quality and consistency of services delivered

13. Evaluation: analysis of how efficiently/ effectively the program is working and the impacts that the program achieved

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Program GoalsOptions• Energy savings - % of pre-treatment use• Reduce ratepayer subsidy• Number of homes served• Amount spent per home or in the program year• Targeting high need customers (elderly, disabled,

young children, high energy burden)• Innovative usage reduction measures• Innovative program delivery systems

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Program GoalsAdvantages and Disadvantages

• Energy Savings– Advantages: sets concrete standards of

measurement for program and contractor– Disadvantages: particular level of savings may

be difficult reach depending on condition of customer homes and budget constraints

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• Ratepayer subsidy types– Percentage of income

• Example: customer pays 8% of income

• Ratepayers bear all the risk because when bill changes, customer payment is fixed

• If bill declines due to usage reduction program, all benefits go to the ratepayers

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• Ratepayer subsidy types– Fixed credit

• Example: customer receives a credit of $100 on the energy bill each month

• Customer bears all of the risk, because when bill changes the subsidy is fixed

• If bill declines due to usage reduction program, all benefits go to the customers

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• Ratepayer subsidy types– Discounted bill

• Example: customer receives a 50% discount on the first 500 kWh used each month

• Ratepayers and customers share the risk because when bills increase both the subsidy and the customer bill increase

• If bill declines due to usage reduction program, benefits go to ratepayers and customers

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• Reduce ratepayer subsidy– Advantages: if achieved, the program will result

in cost-effective savings for the ratepayers– Disadvantages: if all benefits go to the

ratepayers, there may be less motivation for customers to participate in energy reduction strategies

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• Number of homes served– Advantages: ensure that benefits are distributed

to a minimum number of customers– Disadvantages: with a set budget, places limits

on the level of services that a household can receive

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• Amount spent per home– Advantages: ensure that a certain number of

homes can be served within the allocated budget

– Disadvantages: may not allow enough flexibility to address homes with severe problems

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• Targeting high need customers– Advantages: provides benefits to those who

may suffer most from unaffordable energy bills– Disadvantages: may not provide the most cost-

effective program if these are not the highest energy users

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• Innovative usage reduction measures

• Innovative program delivery systems– Advantages: allows for testing of these new measures and

systems that may prove to be cost-effective in the long-run

– Disadvantages: due the to learning curve, program may not be as cost-effective

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Program GoalsExamples• NJ Comfort Partners Program

– 10% average electric savings for electric space heaters

– 15% average gas savings for gas heaters

• Ohio Electric Partnership Program– Reduce the costs of PIPP for the Ohio

ratepayers

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Program GoalsExamples

• WI - Targeted Home Performance with ENERGY STAR– Number of homes served– Savings of 28% heating & 11% electric

• WI - Enhanced Targeted Home Performance with ENERGY STAR– Number of homes served

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Program ManagerOptions

• Public Utility Commission

• State

• Utility

• 3rd Party Administrator

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Program ManagerAdvantages and Disadvantages

• Centralized program – PUC or State– Advantages

• Customers across the state receive equivalent benefits

• Utilities may work together to develop best practices for combined approach

– Disadvantages• Utilities may not have the same program commitment and

involvement

• May lose utility-specific customer knowledge

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Program ManagerExamples• Pennsylvania: Each utility manages its own

usage reduction program

• New Jersey: The Board of Public Utilities manages a statewide usage reduction program

• Wisconsin: Public Benefits – State Dept of Administration oversees statewide program

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Program EligibilityOptions

• Income level– Usually 0 – 150% of Federal Poverty Level

• Housing Types

• Usage

• Participation in bill payment assistance programs

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Program EligibilityAdvantages and Disadvantages

• Income level– Advantages: more restrictive income limits

mean that those with the least ability to pay their bills receive services

– Disadvantages: more restrictive income limits may mean that the highest use customers are not served

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• Housing types– Advantages: more restrictive housing type

selection may allow for more households to receive service

– Disadvantages: more restrictive housing type selection may mean that the highest use customers are not served

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• Usage– Advantages: targeting of highest use customers

usually results in greatest energy savings– Disadvantages: exclusive focus on usage does

not allow for serving those most in need, i.e. lowest income, highest energy burden, elderly, disabled, young children

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• Participation in bill payment assistance programs– Advantages: reductions in usage result in

reduction in subsidies that burden the ratepayers

– Disadvantages: customers who do not participate in bill assistance will not receive usage reduction benefits

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Program EligibilityExamples• Ohio Electric Partnership Program – must

be a PIPP participant and have specified electric usage:– Baseload services: baseload usage > 6,000 kWh– Weatherization services: heating or cooling

usage > 6,000 kWh– Moderate use services: baseload usage of 4,000

to 6,000 kWh

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Program EligibilityExamples

• WI - Targeted Home Performance with ENERGY STAR– Income Guidelines of 150-200% – Single to 4-unit Buildings (owner & rental)

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Customer TargetingOptions

• Highest use customers

• Highest subsidy customers

• Payment troubled customers

• Vulnerable households (young children, elderly, disabled)

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Customer TargetingAdvantages and Disadvantages

• Highest use customers– Advantages: usually results in highest energy

savings– Disadvantages: may not focus on lower usage

customers with high needs due to income, energy burden, other characteristics

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• Highest subsidy customers– Advantages: benefits of the program go to the

ratepayers– Disadvantages: other needy customers may not

be served

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• Payment troubled customers– Advantages: may increase bill payment

coverage rates– Disadvantages: may not result in greatest usage

reduction

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• Vulnerable households (young children, elderly, disabled)– Advantages: reduce energy usage for those who

may suffer most from unaffordable bills– Disadvantages: may not result in greatest usage

reduction

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Customer TargetingExamples• NJ Comfort Partners Program

– USF participant– Highest use customers

• WI - Enhanced Targeted Home Performance with ENERGY STAR– Arrearage requirement

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Expenditure Per HomeOptions

• Comprehensive – maximize savings per home

• Cost threshold / $ Limit per household

• Minimal – increase number of households served

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Expenditure Per HomeAdvantages and Disadvantages

• Comprehensive– Advantages

• Maximize usage reduction for homes served

• Minimize administrative expenses as a percentage of total costs

• Achieve most cost-effective program

– Disadvantages• Fewer homes may be served

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• Cost threshold– Advantages

• Serve a greater number of households

• Ensure that a minimum number of households are served

– Disadvantages• Does not take individual household circumstances into account

• May spend more than what is cost-effective in some homes

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• Minimal– Advantages

• Increase number of households served

– Disadvantages• Customers may not receive significant savings

• Administrative costs are duplicated when other programs return to serve the household

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Expenditure Per HomeExamples• Ohio Electric Partnership Program

– Any cost-effective measure can be installed

• NJ Comfort Partners– Expenditure guidelines are provided, based on

energy usage

• WI – Targeted Home Performance– Any cost effective measure may be installed

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Measure - Options• Refrigerator/freezer replacement• Compact fluorescent light bulbs• Aerators/ showerheads• Insulation• Air sealing• Fuel switching – clothes dryer, hot water heater• Equipment (Heating System, Water Heater,

Central A/C)• Custom measures

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MeasuresAdvantages and Disadvantages

• Advantages– Any measure that provides cost-effective

savings provides benefits to the customer and/or the ratepayer

• Disadvantages– Installing all cost effective measures will

increase program cost– Emphasis on specific measures may neglect

other high uses in the home

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Customer EducationOptions• Partnership between program/educator and

customer

• Understanding the energy bills

• Energy use and costs around the home

• Customer goals for usage reduction

• Customer action plan

• Follow-up

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Customer EducationAdvantages and Disadvantages

• Partnership between program /educator and customer– Advantages: if successful, customer has more

motivation to take steps to reduce energy usage– Disadvantages: takes skilled and dedicated

auditor to make it work

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• Understanding the energy bills

• Energy use and costs around the home– Advantages

• If the customer understands how to read the bill and determine when usage is decreasing, it provides positive re-enforcement for energy-saving actions

• Allows customer to make decisions about energy usage based on the costs of those uses

– Disadvantages• Requires auditor with good communication skills

• Increases length of audit

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• Customer goals for usage reduction• Customer action plan

– Advantages• Provides motivation for customer to reduce energy usage• Provides direction for customer

– Disadvantages• Some customers will not be interested• Auditors must be skillful and willing to take the time

required

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Customer EducationExamples• New Jersey Comfort Partners Program

– Education training provided to all auditors

– Education notebook and cards

– Partnering process

– Bill and energy usage education

– Customer action plan

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Customer EducationExamples

• WI - Targeted Home Performance with ENERGY STAR– Partnering process

– Customer action plan

– Voluntary participation by providers

• WI – Home Energy Plus Weatherization– Planning phase for comprehensive plan

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Service Delivery ContractorsOptions

• Private contractors

• Weatherization agencies

• Community Action Agencies

• Other nonprofit

• Mix of the above groups

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Service Delivery ContractorsAdvantages and Disadvantages

• Private contractors– Advantages

• Cash flow management

• Data management capabilities

• Ability to hire additional staff

– Disadvantages• May have less knowledge/experience with other

public programs

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Service Delivery ContractorsAdvantages and Disadvantages

• Weatherization agencies

• Community Action Agencies

• Other nonprofit– Advantages: ability to provide joint service

delivery with other programs such as WAP– Disadvantages: may not have experience with

contract work

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Service Delivery ContractorsExamples• Ohio Electric Partnership Program

– Allowed private contractors and agencies to bid on program

– First year: 18 authorized providers were selected (1 private contractor)

– Second through fourth years: 9 authorized providers were selected (1 private contractor)

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Service Delivery ContractorsExamples• WI - Targeted Home Performance

ENERGY STAR– Allowed weatherization providers first right of

refusal (18 of 21 agencies participate)– Invited Home Performance with ENERGY

STAR consultants to fill gaps (currently working with three)

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Service Delivery ProceduresOptions

• One visit approach• Two visit approach

– Visit 1: audit/minor measures– Visit 2: insulation/air sealing

• Multiple visit approach– Visit 1: audit/minor measures– Visit 2: insulation/air sealing – Visit 3+: equipment/appliance

subcontractors

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Service Delivery ProceduresAdvantages and Disadvantages

• Fewer visits– Advantages

• May be lower cost

• Lower time investment for customer

• Reduced opportunity for communication problems

– Disadvantages• Greater number of providers in the home at one time

• Requires provider to be skilled in more areas

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Service Delivery ProceduresExamples

• NJ Comfort Partners Program– Contractor specific– One contractor did all possible in one visit– Primary contractor used 2 visits

• Visit 1: audit and minor measures

• Visit 2: air sealing and insulation

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Service Delivery ProceduresExamples

• WI - Targeted Home Performance with ENERGY STAR– Multiple visits norm– Program provider specific

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Data ManagerOptions• State managed

– Collect data from contractors and store in a common database for the program

• Contractor managed– Data stored and managed by contractor– Data sent to state/utility or evaluator as needed

• Utility managed– Collect data from contractors and store at utility

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Data ManagerAdvantages and Disadvantages

• State managed– Advantages

• Data stored in a central location, not at separate utilities or agencies

• Data readily available for management, reporting, and evaluation

– Disadvantages• May be delay in obtaining data from utilities or

agencies• May be problems with data that state cannot interpret

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Data ManagerAdvantages and Disadvantages

• Contractor managed– Advantages

• May have a database that has been tested that can be adapted for the program

• May have expertise and resources for data management• Can design and provide detailed reports to program

manager– Disadvantages

• State or utility may not have data readily available for management and reporting

• Difficult to move program to new or additional contractors

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Data ManagerExamples• New Jersey Comfort Partners

– Primary contractor maintained data for 7 gas and electric utilities

– First Energy had their own data system and also managed data independently

– Moving to system where utilities will manage the data

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Data ManagerExamples

• WI - Targeted Home Performance with ENERGY STAR– Administrator coordinates data collection and

management centrally – Data sent upon request to utilities– Data sent to state monthly for evaluation

purposes

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Data Management SystemsOptions• Paper data collection

– Data collected on paper at the customer’s home– Data entered by contractor after the visit

• Computerized data collection– Customer data loaded into software– Data entered in laptop or PDA while in the

customer’s home– Data uploaded to data management system

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Data Management SystemsAdvantages and Disadvantages• Computerized data collection

– Advantages• Auditor can have customer data (including usage)

available on site• Data entry is not necessary• Software can calculate cost-effectiveness based on

customer usage and other characteristics– Disadvantages

• Computer can interview with customer relationship• Data can be lost

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Data Management SystemsExamples• Ohio Electric Partnership Program

– Data from utilities are screened– Targeted customers are sent to providers– Customers are loaded onto PDA’s or laptops– Data is entered directly into computer during

the audit– Data is uploaded to state– Data used for invoicing and program evaluation

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Data Management SystemsExamples• WI - Targeted Home Performance with ENERGY

STAR– State provides target list of potential customer

electronically– Providers submit paper invoices and

information for reports– Measure Data is uploaded to state for savings– Data used for invoicing and program evaluation

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Quality ControlOptions• Internal/External

– State or utility personnel

– Third party inspectors

• Sampling– What percent of jobs should be inspected?

• Targeting– Equal/random inspection of each contractor

– Focus on contractors who have shown problems in the past

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Quality ControlAdvantages and Disadvantages

• External quality control– Advantages

• More time may be devoted to quality control• May have more systematic procedures for quality

control• May be more objective

– Disadvantages• May be more expensive• Inspectors may not have good understanding of

program design and procedures

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Quality ControlExamples• NJ Comfort Partners

– Utilities hire private contractors to conduct third party inspection

– Each utility specifies procedures for inspections

– Each utility specifies the number or percent of jobs to be inspected

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Quality ControlExamples• WI – Targeted Home Performance with ENERGY

STAR– Program providers expected to perform post installation

final inspection– Program administrator completes % quality assurance

site visits

• WI – Home Energy Plus Weatherization– Program providers expected to perform post installation

final inspection– State subcontracts quality assurance site visits to third

party

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EvaluationOptions

• Internal/External– Conducted by state/utility– Conducted by third party evaluator

• Impact– Energy usage– Bill payment– Environmental– Economic

• Process– Efficiency/effectiveness of program

– Why is the program achieving the outcomes

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EvaluationAdvantages and Disadvantages

• External– Advantages

• More time may be devoted to evaluation• Evaluation expertise• May have more systematic procedures for

evaluation• May be more objective / less biased

– Disadvantages• More expensive• May not have an understanding of the program and

components

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EvaluationExamples• Pennsylvania LIURP Programs

– Each utility must submit a usage impact evaluation each year

– Most utilities use internal staff to provide evaluation report

– One utility uses a private contractor

– Process evaluation not currently done

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Contact us:

Jacqueline Berger APPRISE Incorporated609-252-8009

[email protected]

Suzanne Harmelink

WI Energy Conservation Corporation

608-249-9322 x210

[email protected]

elements of ratepayer-funded low-income programs affordable comfort may 2005 jacqueline berger,...

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