Vermont Gas

Systems, Inc.

2016 EEU

Annual Plan

Prepared for the Vermont Public service Board, Jan. 22, 2016 VGS EEU Annual Plan 2016

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Contents

I. Background Information ....................................................................................................2

II. Introduction .......................................................................................................................4

III. Total program budgets and savings goals ..........................................................................4

IV. Resource Acquisition Program Descriptions ......................................................................6

1. Residential Equipment Replacement (RER) ..................................................................................................... 6

2. Residential Retrofit Program (RIR) .................................................................................................................. 7

3. Residential New Construction Program (RNC) ................................................................................................ 8

4. Commercial Equipment Replacement Program (CER) ..................................................................................... 9

5. Commercial Retrofit Program (CSR) ............................................................................................................. 11

6. Commercial New Construction Program (CNC) ............................................................................................. 12

V. Non-Resource Acquisition Program Descriptions ............................................................13

1. Education and Training ................................................................................................................................ 13

2. Applied Research & Demonstration ............................................................................................................. 14

3. Planning and Reporting ................................................................................................................................ 14

4. Evaluation ................................................................................................................................................... 14

5. Policy and Public Affairs ............................................................................................................................... 14

6. Information Technology ............................................................................................................................... 14

7. General Administration................................................................................................................................ 14

VI. Quantifiable Performance Indicators (QPI)......................................................................15

VII. Thermal Energy Process and Fuels (TEPF) budgets and programs ...................................17

VIII. Evaluation ........................................................................................................................17

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Background Information

Vermont Gas Systems (“VGS”) currently provides service to approximately 50,000 residential, commercial

and industrial customers in Northwestern Vermont.

Vermont’s only natural gas utility

Currently serving 50,000 customers in Franklin and

Chittenden Counties

Established in 1965 after a state initiative to bring

an alternative energy source to Vermont to

support economic development

Regulated by the VT PSB

Holds the franchise for all of Vermont

Committed to bringing the economic and

environmental benefits of natural gas to more

Vermonters

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While residential customers comprise the majority of Vermont Gas’ customers, from a sales perspective,

Vermont Gas’ market is roughly one-third from each of residential, commercial and industrial customers.

Vermont Gas is proud of its strong customer relationships which include home owners, renters, builders &

developers, large and small commercial customers and many institutional customers such as hospitals,

colleges and universities.

The Company’s customer base is currently located in Franklin and Chittenden counties. During 2015 the

Company began serving customers in Addison County via compressed natural gas (“CNG”) through an

innovative natural gas island. Through the construction of the Addison Natural Gas Project (“ANGP”)

Vermont Gas will bring pipeline natural gas service to these CNG customers as well as to residential and

commercial customers in Vergennes and Middlebury in late 2016. Customers who sign a sales application

for natural gas service in Vergennes and Middlebury will meet the definition of “eligible customer” as

outlined in the Board’s April 17, 2015 Order and will be able to participate in VGS’ EEU activities.

Natural gas competes with alternative fuel choices that include oil, propane, kerosene, electricity and

wood or wood pellets. As a result, VGS is committed to exemplary service, safety and energy conservation

as well as keeping our rates low and affordable.

In addition to its energy efficiency programs, VGS offers customers several other tools to help manage

their bills and ensure safe, reliable natural gas service. These include budget plans, a low income discount

88.4%

11.5% 0.1% Customers

Residential Commercial Industrial

32.5%

24.7%

42.8%

Sales Volume

Residential Commercial Industrial

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for income-eligible customers, rental of natural gas equipment, and service contracts to assist customers

with maintaining the safe operation of their natural gas equipment.

Introduction This Annual Plan for 2016 is submitted by Vermont Gas Systems (“VGS”) to the Vermont Public Service

Board (“Board”) pursuant to VGS’s responsibility to deliver energy efficiency utility (“EEU”) services. This

Plan is a reflection of the VGS Transition Period Plan (“TPP”) covering calendar years 2016 and 2017. The

TPP plan was developed by VGS with input from the Vermont Department of Public Service (“DPS”). This

Annual Plan does not reflect any major changes to VGS’ energy efficiency programs as a result of it being

year 1 of a 2 year transition plan.

Vermont Gas currently offers six energy efficiency programs. It has two distinct market sectors:

residential and commercial/industrial (“C&I”) customers. There are three residential programs offered to

residential properties (rental and owner-occupied) while the three C&I programs provide energy efficiency

services to C&I customers of all sizes, including interruptible.1 Both the residential and commercial

programs have an equipment replacement program, a new construction program and a retrofit program.

Each Program is described in more detail below. In keeping with our diversified customer base, VGS is

committed to serving all customers through its energy efficiency programs. All six programs strive to not

only cost effectively improve a home or building’s performance by saving energy but quite frequently

increase comfort levels, lower carbon emissions and save Vermonter’s money over the lifetime of the

measures.

Total program budgets and savings goals VGS is projecting that for calendar years 2016 and 2017, total energy efficiency spending will amount to

just over $5.7 million. The total resource benefits are expected to exceed $26 million resulting in both

energy load and peak day demand of almost 800 Mcf annually. The following is a summary of Board

approved TPP budgets and savings goals. The budgets and savings goals were proposed to the Board

through a collaborative process between VGS and the DPS utilizing historical VGS performance data,

federal and state policies, projected data as well as rate and bill impacts.

1 Only wholesale CNG customers served under one of VGS’ CNG tariffs and customers participating in self-managed energy efficiency programs are ineligible for VGS’ programs.

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2016 2017 2-yr Total

Natural Gas Resource AcquisitionVGS EE Delivery Budget $2,513,464 $2,720,276 $5,233,740

Expected Mcf Savings Goal 69,000 77,386 146,386

Expected BudgetCommercial $806,921 $912,999 $1,719,920

Residential $1,706,543 $1,807,277 $3,513,820

Total $2,513,464 $2,720,276 $5,233,740

Non Resource Acquisition $243,964 $251,449 $495,413

Total RA & NRA Budget $2,757,428 $2,971,725 $5,729,153

Additional Regulatory CostsDPS Evaluation $216,860 $224,360 $441,220

TEPF Clearing House $75,330 $17,670 $93,000

Fiscal Agent $5,500 $5,500 $11,000

Fiscal Agent Audit $2,500 $2,500 $5,000

Total Natural Gas EEC-Funded $3,057,618 $3,221,755 $6,279,373

2016 2017 2-yr Total

ResidentialNew Construction 9,231 9,552 18,783

Equipment Replacement 12,577 12,776 25,353

Retrofit 3,405 3,596 7,001 Low Income 701 701 1,402

TOTAL RESIDENTIAL 25,914 26,625 52,539

CommercialNew Construction 14,980 17,762 32,742

Equipment Replacement 16,049 17,119 33,168 Retrofit 16,887 21,297 38,184

TOTAL COMMERCIAL 47,916 56,178 104,094

Total Stretch Target 73,830 82,803 156,633

Total Program Budget

Stretch Target (Mcf)

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Resource Acquisition Program Descriptions

1. Residential Equipment Replacement (RER)

The point at which consumers either add or replace natural gas-fired equipment presents a critical

opportunity for influencing choices to reduce usage. Vermont Gas’ Residential Equipment Replacement

(RER) program offers rebates on qualifying high efficiency space and water heating equipment.

The RER program encourages customers to install water and space heating equipment that exceeds the

standards established by the National Appliance Energy Conservation Act (NAECA) or the de facto baseline

efficiency for the specific equipment type. These replacements typically occur when the equipment has

failed and can no longer be repaired, has reached the end of its useful life, or when the fuel source for

heating the home is being switched to natural gas.

Customers will receive incentives to help offset the average incremental cost of the high-efficiency

equipment. Fixed rebates have been established for equipment that has a societal benefit-to-cost ratio

greater than one across a wide band of usage levels. The fixed rebate schedule for the Annual Plan is

shown in the following table and may be revised from time to time in response to changing markets.

1.1 RER- Fixed Rebate Schedule (new rebates effective 2/1/2016)

Eligible Equipment

(must be purchased new)

Required Efficiency

(as listed in GAMA) Rebate

Hot Air Furnace 94%+ AFUE $400.00

Hot Water Boiler 90% - 94.9% AFUE $600.00

Hot Water Boiler 95 %+ AFUE $800.00

Direct Vent Space Heater ≥.81 %+ AFUE $200.00

Water Heater ≥.70 EF $200.00

Tankless Water Heater ≥.70 EF $300.00

Tankless Water Heater ≥.90+ EF $500.00

Indirect-Fired Storage Tank On 92% + AFUE

boiler $100.00

Drain Water Heat Recovery Call for further details $300.00

Solar Hot Water Call for further details $950.00

Solar Furnace Call for further details $200.00

Of note in the table above is the addition of rebates for higher efficiency space heaters. VGS has found

that in certain instances either gas fireplaces or lower efficient space heaters are being installed by

customers. In response, VGS is offering a $200 rebate to encourage the installation of higher efficiency

space heaters.

The Solar hot water heaters do not pass the societal cost effective screening for an average VGS customer,

however it does screen for higher users. To minimize market barriers for this new offering, Vermont Gas

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is offering the solar water heater incentive as a prescriptive rebate without a minimum usage

requirement. VGS will track the loads of customers installing these units and may implement a minimum

usage requirement in the future.

Other changes to the prescriptive rebate schedule include adding solar furnace rebates, an additional

efficiency tier on tankless water heater rebates, increased minimum AFUE’s on boilers and greater rebates

for drain water heat recovery as a result of low participation.

In addition to the rebates listed above, VGS will offer customers reduced interest loans, up to $10,000, for

high efficiency equipment through its partnership with Green Mountain Credit Union. Finally, Vermont

Gas will on a case-by-case basis, screen custom residential equipment and offer appropriate rebates.

Rebates will not exceed the incremental cost of the high efficiency equipment.

2. Residential Retrofit Program (RIR)

The VGS Retrofit Program (RIR) reduces natural gas/thermal consumption and peak day demand in

residential buildings that use natural gas, or are converting to natural gas, for space heating. Where cost-

effective, domestic hot water conservation measures are also installed.

For this Annual Plan, all residential buildings that consume in excess of 50,000 btus per square foot per

year are eligible for a free energy audit. For customers who do not meet the usage requirements, VGS has

available a complimentary copy of the Consumer’s Guide to Home Energy Savings published by ACEEE.

https://www.homeenergy.org/store/consumer-guide-savings. For low income projects there is a nominal

900 Ccf per year minimum usage requirement.

A free energy audit will be performed by a VGS staff auditor to identify cost-effective energy saving

measures. The building's previous consumption patterns and potential improvements will be modeled

using a computer audit tool developed by VGS. Building owners will provided a written report

summarizing the audit results and detailing the financial incentives available. VGS auditors will identify

electric saving measures and direct the customer to Efficiency Vermont and Burlington Electric for possible

additional incentives.

In addition to financial incentives, building owners will be provided with technical assistance and project

management services at no cost to encourage the installation of the efficiency measures identified in the

audit report. Customers will have the choice of obtaining competitive bids, or having VGS assign a pre-

screened contractor through the "FastTrack" option. For the past several years, approximately 90% of

customers have chosen the FastTrack option. For this Annual Plan VGS expects a similar pattern. VGS will

offer assistance in obtaining bids for those customers who prefer not to use the "FastTrack" option.

VGS will provide cash incentives equaling 33% of the estimated installed measure cost where the building

owner pays the heating bill or 50% of the installed measure cost if the tenant pays the heating bill. VGS

will also offer reduced interest financing for the balance of the installed measure cost through Green

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Mountain Credit Union. During the Annual Plan, customers will be offered the following choice of rates

and terms: 0% for three years, 2% for five years, or 4% for up to ten years.

In Burlington, VGS will continue its Energy Champ Challenge partnership with Burlington Electric

Department to encourage multi-family building owners to invest in weatherization measures. Under this

pilot program, VGS will cover 75% of measure costs provided the building owner installs all recommended

measures. Vermont Gas is targeting 45 multi-family completions during the Annual Plan2.

Low income customers will be served primarily through a partnership with Champlain Valley Office of

Economic Opportunity Weatherization (CVOEO-Wx) CVOEO-Wx will verify the customer's income status

and eligibility to perform the energy audit, and coordinate the installation of the recommended measures.

VGS will contribute a portion of the income verification, auditing, project management, and measure

costs.

For 2016, Vermont Gas has budgeted for almost 50 low income participants and over 500 Mcf projected

savings in the joint low income program. To achieve these savings VGS has budgeted $135,000 in

incentives for low income customers through the joint VGS/CVOEO Weatherization Program. VGS will also

continue its partnership with Efficiency Vermont regarding the Home Performance with Energy Star

program (HPwES) program. Natural gas customers who elect to receive energy audits through Efficiency

Vermont or Burlington Electric’s consortium of HPwES contractors will be able to take advantage of VGS

incentives for cost effective natural gas measures.

VGS will continue to offer its “Condo Initiative” through 2016. VGS is promoting air-sealing and attic

insulation to condominiums. Condominiums have historically been hard to cost-effectively serve in VGS’

comprehensive audit program due to generally low usage levels. If condominium owners choose to

participate VGS will;

1) Visit condominium to conduct a “walk-through” audit to look for additional efficiency upgrades; 2) Review both natural gas and electric usage to compare to other units in the building; 3) Offer a $600 rebate for work completed; and 4) Inspect the installation at no cost to the homeowner.

3. Residential New Construction Program (RNC)

The Annual Plan will continue the joint implementation of the statewide Residential New Construction

program jointly offered by Vermont Gas and Efficiency Vermont (EVT). Vermont Gas delivers the service

for its customers and EVT delivers the service in the remainder of the state. All residential new

construction projects in Vermont will be eligible for technical assistance and incentives from EVT, but

projects that will use natural gas are also eligible for enhanced services and rebates from VGS. This

program will continue to be administered in two separate tiers; Energy Star and Code Plus homes. Each is

described further below.

2 The Energy Champ Challenge goal is 50 completions by December 2016. Five projects have completed in 2015.

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These programs have two participant tracks. The single family track is for individually metered (for gas)

stand-alone single family homes, and for individually metered attached dwellings such as condominiums

and row houses. All single-family track participants will receive a Home Energy Rating (“HER”) at no cost.

The multi-family building track is for large, master metered, centrally heated multi-family buildings. All

participants whether single or multi-family will be encouraged to have their buildings receive energy

ratings. For multi-family buildings heated by natural gas, VGS will perform analyses of mechanical,

thermal, and domestic hot water energy efficiency measures, and partners with EVT when appropriate to

maximize the savings opportunities in these projects. Multi-family projects that are designated for

occupancy by low-income populations are co-administered with CVOEO as described above.

3.1 Vermont ENERGY STAR and CODE PLUS Homes

To qualify for the ENERGY STAR label and related incentives in the single family track, participants must

build a home to the following specifications;

1. Achieve a Home Energy Rating score of 60 points or less.

2. Install controlled mechanical ventilation.

3. Meet or exceed the requirements of the Thermal Enclosure, HVAC, and Water Management checklists.

4. Install Energy Star rated heating and cooling equipment.

5. 80% of the home’s lighting must be energy efficient.

6. Installed appliances must be Energy Star rated.

To qualify for the Code Plus label and related incentives in the single family track, participants must build a

home to the following specifications;

1. Achieve a Home Energy Rating score of 75 points or less.

2. Install controlled mechanical ventilation.

3. Install Energy Star rated heating and cooling equipment.

4. 50% of the home’s lighting must be energy efficient.

5. Installed appliances must be Energy Star rated.

3.2 RNC – Rebates

All ENERGY STAR labeled Homes in Vermont Gas service territory that utilize natural gas as the primary fuel

will receive a total incentive of up to $650 based upon the HER score.

CODE PLUS LABELED Homes in Vermont Gas service territory that utilize natural gas as the primary fuel will

receive a total incentive of up to $400 based upon the HER score. In addition to the rebates listed above,

Vermont Gas will cover the HER cost of $312 per home.

4. Commercial Equipment Replacement Program (CER)

The Commercial Equipment Replacement (CER) Program reduces natural-gas consumption and peak-day

demand by encouraging the installation of high-efficiency natural-gas equipment. The goal of this program

is to encourage commercial and industrial customers to install appropriate equipment that exceeds

minimum energy efficiency standards established by federal, state and local codes where it is cost-

effective to do so.

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This program is available to all commercial and industrial customers, or potential customers, that are

replacing failed or end-of-life natural-gas space, water, or process heating and cooling equipment or C&I

customers that are fuel switching to natural gas or purchasing new equipment.

To be eligible, equipment must be either listed on the fixed rebate schedule or pass a custom cost-

effectiveness screening.

For smaller residential sized equipment, the National Appliance Energy Conservation Act (NAECA)

establishes minimum energy efficiency standards for furnaces, hot water and steam boilers, and tank-type

water heaters. However, for commercial equipment, the 2011 Vermont Commercial Building Energy

Standard is utilized as well as the ASHRAE 90.1 -2007 which establish baselines for equipment minimum

efficiency levels.

C&I customers will receive cash rebates to reduce the incremental cost of purchasing and installing cost-

effective high-efficiency natural gas equipment. The following table outlines the fixed rebates to be

offered during 2016.

4.1 CER - Fixed rebate schedule (new rebates effective 2/1/2016)

ELIGIBLE EQUIPMENT

REQUIRED EFFICIENCY

REBATE

AMOUNT

Hot Air Furnace 94%+ AFUE $400.00

Water Heater, ≤ 75 MBH ≥ 0.70 Energy Factor $200.00

Water Heater, 75 to 300 MBG 0.82 - 0.89 Thermal Efficiency $300.00

Water Heater, 75 to 300 MBG ≥ 90% Thermal Efficiency $500.00

Indirect-fired Water Heater Standby loss ≤2°F/Hr., must connect

to ≥92% AFUE boiler.

$100.00

Unit Heaters up to 130,000 BTU/H > 90% Thermal Efficiency $300.00

Unit Heaters >130,000 BTU/H > 90% Thermal Efficiency $400.00

Infrared Radiant Heaters Power Vent, Inter. Ignition $400.00

Boilers ≤300 MBH 90%+ AFUE $600.00

Boilers ≤300 MBH 95%+ AFUE $1000.00

Carbon Dioxide Sensor Control * Equipment

must be field verifiable.

Reset of ventilation air based on

HVAC zone CO2 levels

$250.00

Commercial Combination or Convection

Oven

Energy Star listed $750.00

Commercial Steam Cooker Energy Star listed $500.00

Fryolator (per vat) Energy Star listed $500/vat

Commercial Griddle Energy Star listed $125

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For other types of high-efficiency natural-gas equipment not listed in the fixed rebate schedule, or in

unique circumstances, VGS will use a custom screening tool to evaluate measures for cost-effectiveness.

Equipment with a benefit-to-cost ratio of greater than 1 will be eligible for a custom rebate.

For the Annual Plan changes to the rebate schedule include, adjusting the minimum energy factor on

water heaters, adjusting the minimum AFUE on boilers and adjusting the rebates to better reflect current

market conditions.

In addition to rebates, VGS will provide engineering and analytic support at no charge to customers. For

projects where specialized engineering assistance is required, VGS will provide assistance to customers in

locating and selecting qualified consulting engineers, and may help offset the cost of engineering analyses.

Energy efficiency projects for interruptible customers will be treated no differently than projects for firm

customers, with the exception that no peak day savings will be projected in the cost-effectiveness

screening.

5. Commercial Retrofit Program (CSR)

The Commercial Retrofit (CR) Program reduces natural gas consumption and peak day demand by

encouraging VGS' commercial and industrial customers (building owners or occupants) to install cost-

effective, natural gas-saving space, water and/or process heating measures.

Existing and prospective commercial and industrial customers that use or may be considering the use of

natural gas for space, water and/or process heating are eligible for the CR program.

VGS will provide customers with a free walk-through audit of their facility to identify potentially cost-

effective energy efficiency measures. Engineering assistance will be provided by VGS for the measures

identified. When outside engineering assistance is appropriate, VGS may assist with the cost of the

engineering study.

VGS will offer financial incentives, typically in the form of rebates for the installation of energy efficiency

measures. Rebate amounts will be project specific based on the customer's savings and payback and the

value of the avoided cost savings to VGS ratepayers.

Retrofit projects for interruptible customers will be treated no differently than projects for firm customers

in the program, with the exception that no peak day savings will be projected for interruptible customers.

VGS and EVT have entered into a joint agreement with WestRock Converting Company (Formerly Rock-

Tenn) for the purpose of developing a Superior Energy Performance (“SEP”) certification pursuant to the

standards and protocols established by the Department of Energy. VGS and EVT will cost share 50% of the

addition of (1) Energy Project Manager position for (2) years. The Energy Project Manager will be a

WestRock employee and is responsible for the day-to-day interactions with VGS and EVT and coordinating

the SEP-related work.

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6. Commercial New Construction Program (CNC)

The Commercial New Construction (CNC) Program is designed to reduce natural gas consumption and

peak-day demand by encouraging commercial and industrial building owners to incorporate cost-effective

natural gas saving measures in both the design and construction of new buildings and in the expansion,

renovation, or remodeling of existing buildings.

All commercial and industrial customers who are building new facilities or who are substantially

expanding, renovating or remodeling existing buildings using natural gas for space, water and/or process

energy needs may participate in the CNC program.

VGS will provide customers with a review of the building plans and, as needed, energy analysis of

potentially cost-effective natural gas saving measures. In addition, VGS will supply the customer and/or

their design team with energy efficient equipment information, technical assistance, lists of

manufacturers, and information about improved construction techniques and building materials.

VGS will provide technical assistance to both Act 250 permit applicants and projects not under Act 250

provisions that have chosen natural gas as a fuel source. This technical assistance may include a plan

review and life cycle cost analysis for interested customers. VGS will actively assist customers in their

efforts to comply with the Act 250 permit criteria, and will strongly encourage them to exceed these

minimum requirements. For measures that exceed the energy code baseline, VGS may provide financial

incentives. Occasionally, VGS may provide an incentive up to 50% of the incremental cost of the measure

for relatively new technology that requires additional encouragement for a successful installation. The

baseline efficiency and cost, proposed efficiency and cost as well as fuel savings are reviewed and

analyzed on a case-by-case basis. This higher incentive is reserved for measures that may be new to the

marketplace. Incentives are determined on a case by case basis.

Local, state and/or federal energy and building construction codes establish the baseline for comparing

the cost-effectiveness of the proposed natural gas saving measure(s). The 2011Vermont Commercial

Building Energy Standard (hereinafter "Act 250 Guidelines") as well as ASHRAE 90.1 -2007 establishes the

baseline.

New construction projects for interruptible customers will be treated no differently than projects for firm

customers, with the exception that no peak day savings will be projected in the cost-effectiveness

screening.

For projects located in the City of Burlington, VGS and BED will work together on projects, sharing

information and meeting jointly with customers. When projects are located outside of the City of

Burlington, VGS will work closely with Efficiency Vermont to provide customers with energy efficiency

assistance.

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Non-Resource Acquisition Program Descriptions

As described in the TPP, non-resource acquisition activities (NRA) include the subcategories; Education &

Training, Applied Research & Development, Planning & Reporting, Evaluation, Policy & Public Affairs,

Information Technology and General Administration. These activities are not directly associated with

energy savings, but are essential in supporting and improving the programs as a whole. Further

description of each subcategory is described below and the budget for 2016 and 2017 is shown below.

1. Education and Training

Staff members will attend information and training seminars to ensure there is full understanding of codes

covering both commercial and residential programs and services. The training is expected to include

Better Buildings By Design, Affordable Comfort, CEE, ACEEE and any other training program that promotes

training or education pertaining to energy conservation.

Similarly, Vermont Residential Building Energy Standard (RBES) and Commercial Building Energy Standard

(CBES) were adopted by the state in ACT89 in 2015 and VGS was a major stakeholder in the code

formation and will continue this participation as needed.

VGS has included in calendar year 2016 plan a partnership with, Vermont Energy Education Program

(VEEP) as part of an initiative that is intended to ultimately modify behavior. The goal is to promote

energy literacy particularly among K-12 students on the subject of weatherization and efficient use of

heating fuel within the Vermont Gas footprint. After collaborating with VGS, VEEP will create age and

grade appropriate curriculum to deliver within targeted school systems, provide outreach and monitor

and adapt programs based on feedback. Even though the primary focus is energy education, this initiative

could potentially result in energy savings for our future home renters/owners.

2016 2017 2-yr Total

1. Education & Training 44,495$ 45,622$ 90,117$

2. Applied Research & Demonstration 15,790$ 16,580$ 32,370$

3. Planning and Reporting 55,786$ 57,376$ 113,162$

4. Evaluation 44,943$ 46,197$ 91,140$

5. Policy and Public Affairs 15,790$ 16,579$ 32,369$

6. Information Technology 31,895$ 32,770$ 64,665$

7. Administration - Non-Program Specific 35,265$ 36,326$ 71,591$

Non Resource Acquisition 243,964$ 251,449$ 495,413$

Total Non Resource Acquisition Budget

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2. Applied Research & Demonstration

This work will include those VGS efforts pertaining to emerging new technologies, analytics or data

services geared around new concepts and technologies that are not yet proven or accepted. Vermont

Gas’ agreement with EVT includes VGS’ share of costs related to research and development for technology

and demonstrations.

3. Planning and Reporting

Any work that includes VGS’s responsibility to provide Annual Plans, Transition Period Plans as well as the

Demand Resource Plan process in terms of reporting to the Board as a result of the “Process and

Administration of an Order of an Appointment” document for VGS as a result of becoming an EEU falls

into this category. This includes collaboration with DPS, EVT and BED.

4. Evaluation

The DPS will begin annually verifying VGS savings claims. The process requires the delivery of VGS’s annual

savings claim to the DPS along with a sample of individual project files for review. Throughout the process

there will be a regular exchange of information and discussion regarding savings quantification methods

and documentation. This process will include evaluation of methods of calculations as well as

characterizations around basis for savings claims whether customized or prescriptive for forecasting or

claimed savings to continuously improve savings estimates.

5. Policy and Public Affairs

Work that supports VGS’s participation in broad energy efficiency related discussions will be in this

category. This will include participation in energy forums, working with the media to explain the role of

energy efficiency and to respond to media requests for information, including briefing the Legislature on

efficiency-related matters.

6. Information Technology

VGS updated its energy services database several years ago and refers to it as “DSMPro.” DSMPro is a

Windows application that provides a structured interface for the collection of building envelope data and

savings calculations in support of DSM programs. The DSMPro database is constantly improved to help in

the collection and reporting of measure, project and program reporting. This is critical for planning,

reporting, forecasting and overall tracking. There is a regular need to modify existing tools, add new tools

as well as the functionality to the system which helps to better understand and respond to changes. This

includes streamlining processes to lower administrative costs while improving overall program

performance. This also includes the efficiency of its project savings analysis and production of customer

energy audit reports.

7. General Administration

VGS’s costs for the overall management of its EEU programs that are not specific to individual programs.

This includes general staff meetings, coordination of program implementation across all program

functions, managing and monitoring overall performance as well as collaboration with other EEU’s that do

not result in direct savings.

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Quantifiable Performance Indicators (QPI) VGS and the DPS collaboratively developed the quantifiable performance indicators (“QPI”) and minimum

performance requirements (“MPR”). By Order dated on December 23, 2015 in EEU-2015 the PSB approved

the QPI’s and MPR’s for performance period 2016-2017. This Annual Plan is intended achieve the QPIs and

MPR approved in that Order. For ease of reference, the QPI’s and MPR are also provided in this Annual

Plan and described below.

QPI’s 1-3 address combined Mcf savings, Total Resource Benefits and Peak Day Savings. QPI 4 specifically

address the Residential Retrofit Program single family homes and measure the percent of audits that

convert into completions as well as the percent of cost effective measures that are recommended that go

on to completion.

MPR’s 5-8 pertain to equity to all natural gas ratepayers as well as residential, low income and small

business owners to ensure they receive minimum levels of service as reflected in spending. MPR’s 9-10

are date dependent to ensure QPI’s are set for long-term market transformation, business

comprehensiveness of savings and overall program implementation efficiency for identifying program

improvements and efficiencies.

As a result of increasing baselines in new construction and equipment replacement as evidenced by the

modifications in the fixed rebates schedules VGS considers the QPI’s a stretch goal. 2016 is the first year

in VGS’s TPP 2016-2017 period and as such does not have any results to report on for year to date. Please

see the following table for the QPI’s and MPR’s that were established for VGS during the transition 2016-

2017 time period and note that no performance awards are assumed.

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Performance Indicator

Milestone

1 Natural Gas SavingsAnnual incremental net Mcf

expected savings156,633

Annual incremental Mcf savings indicator

intended to encourage EEU to design and

implement efficiency initiatives that will

maximize natural gas energy savings30%

Annual

Verification

Process

Department of

Public Service

2Total Resource

Benefits

Present worth of lifetime

natural gas, other fossil,

and water expected benefits

$26,664,000

Encourage EEU to design and implement

efficiency initiatives that will maximize the

lifetime natural gas, fossil fuel, and water

benefits

30%

Annual

Verification

Process

Department of

Public Service

3 Peak Day SavingsPeak day incremental

expected savings786

Cumulative peak day savings indicator

intended to encourage EEU to design and

implement efficiency initiatives that will

maximize the capacity reduction coincident

with peak day demand

20%

Annual

Verification

Process

Department of

Public Service

a. Percent of home energy

audits converted to a

measure installation within

12 months

30% 10% Tracking SystemDepartment of

Public Service

b. Percent of all cost

effective measures as well as

those measures

recommended by the audit

and installed by the

customer within 12 months.

70% 10% Tracking SystemDepartment of

Public Service

5

Minimum Natural Gas

Benefits (Equity for all

Natural Gas

Ratepayers)

Total natural gas energy

efficiency benefits divided by

total costs

Equal or greater

than 1.2 cost

benefit ratio

Equity for all Vermont natural gas

customers as a group by assuring that the

overall natural gas benefits are greater than

the costs incurred to implement and

evaluate the natural gas EEU and the

natural gas EEC

0%

(Minimum

Requiremen

t)

Tracking SystemDepartment of

Public Service

6Equity for Residential

Ratepayers

A minimum level of overall

efficiency efforts, as

reflected in spending, will be

dedicated to residential

customers

$2.4 M

Equity for residential customers by

assuring that a minimum level of overall

efficiency efforts, as reflected in spending,

will be dedicated to residential customers

0%

(Minimum

Requiremen

t)

Tracking SystemDepartment of

Public Service

7Equity for Low-

income Customers

A minimum level of overall

efficiency efforts, as

reflected in spending, will be

dedicated to Low-income

customers

$153,000

Equity for low-income customers by

assuring that a minimum level of overall

efficiency efforts, as reflected in spending,

will be dedicated to low-income

households

0%

(Minimum

Requiremen

t)

Tracking SystemDepartment of

Public Service

8Equity for Small

Business Customers

Percent of commercial (non-

residential) installed end uses

that are classified as Rate

G1 or G2 (use 600 Mcf/yr.

or less)

30%

Equity for small business customers by

assuring that a minimum level of overall

efficiency efforts, as reflected in

participation, will be dedicated to small

business accounts

0%

(Minimum

Requiremen

t)

Tracking SystemDepartment of

Public Service

9Long-term Market

Transformation

Meet milestone schedule for

proposing a QPI (and

method for measurement)

for next performance period

2/28/2017

Encourage EEU to design and implement

efficiency initiatives that maximize market

transformation

0%

(Minimum

Requiremen

t)

Tracking SystemDepartment of

Public Service

10

Business

Comprehensiveness of

Savings

Meet milestone schedule for

proposing a QPI (and

method for measurement)

for next performance period

2/28/2017

Intended to ensure that energy efficiency

initiatives are designed and implemented to

acquire comprehensive savings

0%

(Minimum

Requiremen

t)

Tracking SystemDepartment of

Public Service

11

Program

Implementation

Efficiency

Meet milestone schedule for

identifying program

improvements and

efficiencies

2/28/2017

This indicator is intended to encourage the

program administrator to continually assess

its operations to continue to deliver

services that maximize ratepayer value

0%

(Minimum

Requiremen

t)

Tracking SystemDepartment of

Public Service

Entity

Responsible for

Verification

Quantifiable Performance Indicators ("QPI")

Residential Single

Family

Comprehensiveness

Intended to ensure that energy efficiency

initiatives are designed and implemented to

acquire comprehensive savings

Minimum Performance Requirements ("MPR")

4

QPI/

MPR#Title Target Policy Goal Advanced Weight

Form of

Verification

17

Thermal Energy Process and Fuels (TEPF) budgets and programs Pursuant to Board Order 30 V.S.A. § 209(g)(2) a framework for a thermal energy and process fuels ("TEPF")

statewide information clearinghouse was established. In addition, an initial funding source and budget

recommendations for the clearinghouse were set. The Department has estimated the 2016-2017 TEPF

Clearing house costs to be approximately $300,000 in total and calculated the VGS portion to be 31% or

$93,000 over the two year period.

Evaluation The Department developed proposed plans to evaluate VGS’s natural gas energy efficiency programs for

the 2016-17 performance period.

The overall goal of the proposed evaluation plan is to provide ratepayers as well as the Board with an

independent evaluation of VGS’s EEU programs, pursuant to statutory obligations under § 209(f)(10). Not

only will the direct impact of VGS’s energy efficiency initiatives be verified, but will offer improved

understanding of the programs, markets and advancement of the programs. The following reflects the

overall objectives:

1. Verify the annual savings claims, peak day savings and Total Resource Benefits;

2. Evaluation “Non-Resource Acquisition” activities as needed;

3. Market studies to characterize and assess VGS energy efficiency markets as well as new markets

that may be identified;

4. Benchmark the VGS’s energy efficiency portfolio and initiatives relative to other natural gas

programs in the nation;

5. Support the development and understanding of changing baselines and measure characterizations

through participation in the Technical Advisory Group, including measures or initiatives where

significant uncertainty exists and/or where the potential savings contribution is large;

6. Maximize the value of evaluation expenditures by retaining in-house resources and partnering

with other New England evaluation efforts where possible and appropriate.

The Plan’s goals will be met through a variety of evaluation techniques, including impact assessments,

market characterizations and assessments, process evaluations, and other research and planning activities

related to VGS’s natural gas energy efficiency programs. Some activities will be carried out via

independent contractors and others will be performed by in-house staff in order to reduce the proportion

of contracted efforts, build the Departments expertise, and creation of in-house management and tracking

systems related to natural gas energy efficiency.

The following table is the 2016-2017 evaluation budgets for VGS as created by the Department. The

budget includes in-house staff time as well as outside resources.

18