TEP Guarantee Program Tucson Electric Power
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- Penelope Maxwell
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1 Program Synopsis TEP provides onsite training and technical assistance from design to completion. This is a residential new construction program that guarantees heating and cooling costs and comfort for five years. If the annual cost exceeds the specified cost, the homeowner will receive a refund for 100% of the exceeded costs Homeowners also receive a guarantee that the utility will install gas heating if the customer is not satisfied with the electric heat pump. Each Guarantee Home receives a reduced electric rate that ranges from 12-22% lower than the standard residential electric rate. Every Guarantee Home exceeds Energy Star requirements and automatically receives Energy Star certification from DOE. Program objectives are to reduce system peak demand, increase off peak demand, increase energy use during non-peak months. Program Type Incentive PrescriptiveRebates CustomIncentivesSPC BillCreditsRateDiscounts Services DirectInstallation FinancingLoansLeasing FreeMeasures InHousePlusSubs IncentiveOther Information and Training GeneralEducation MailAudit TelephoneAudit OnSiteAudit OnLineAudit DesignAssistance FeasibilityStudies EndUserTraining TradeAllyTraining Program Focus Primary Market Events Targeted AllMarketEventsTargeted NewConstructionRenovation ExistingConstructionAll ExistingConstructionRetrofit ExistingConstructionNaturalReplac ExistingConstructionEarlyRetire Primary Program Focus EndUser SupplySide EndUserAndSupplySide Residential End User Target Markets ResidentialALL SingleFamily MultiFamily MobileHome - 1
2 LowIncome ResOther Commercial/Industrial End User Markets Commercial All Offices Retail Restaurant Public (govt.) Facilities Grocery Store Health Care Education Lodging (Hotels/Motels) Warehouses Industrial All Other Market Barriers End User Supply Side Information or Search Costs Performance Uncertainties Asymmetric Information and Opportunism Hassle or Transaction Costs Hidden Costs Misplaced or Split Incentives Product or Service Unavailability Externalities Non-Externality Pricing Inseparability of Product Features Access to Financing - 2
3 Bounded Rationality Organizational Practices or Customs Irreversibility Other End User Other Supply Side Supply Side Actors Targeted SupplySideActorNotProgFocus AorEFirms Manufacturers Realtors Developers Builders Contractors TradeAssociations WholesalersDistributors Retailers EnergyServiceCompanies NonProfitNotForProfitGroups Govt Other Types of measure/end use technologies ALL MEASURES HVAC High Efficiency DX/HP High Efficiency Chillers High Efficiency Room/Terminal Economizers Control Systems Variable Speed Drives Occupancy Sensors Duct Sealing and Balancing Equipment Testing/Tune-up Commissioning Lighting Compact Fluorescents Electronic Ballasts Reflector Systems Efficient Fluorescent Lamps (T-8, T-5, etc.) Lighting Controls Occupancy Sensors High Intensity Discharge Day lighting - 3
4 Retro-commissioning Space Heating Heat Pump Water Heating Load Control (Cycling) High Efficiency Insulation Blankets Low-Flow Showerheads Low-Flow Aerators Solar Assisted Motors High Efficiency Variable Speed Drives Industrial Process Compressed Air Motors Pumps Applicances Refrigerators Dish Washers Clothes Washers Clothes Dryers Office Equipment Plug Load Building Envelope Insulation Infiltration Control Glazing and Glazing Control Windows Refrigeration High Efficiency Controls Variable Speed Compressors Multi-Stage Compressors Commissioning Other (specify) - 4
5 Program Context The program was affected by many changes in policy, funding, and marketing. TEP established special 3-tier electric rate for customers in this program. In 2000, energy efficiency funding was shifted to the Renewable Portfolio Standards program, leaving very little available DSM funding for programs like this. In response, TEP began funding the program with shareholder money. Deregulation bill required builders to pay to install gas lines in all homes regardless of whether they choose to use gas services or not. In 2003, the local gas company decided to refuse installation of gas service in any subdivision that participated in the TEP Guarantee program. Program Components Program Management Program operates with 12 full time in-house staff and one contractor working part-time. There are 2 supervisory (Manager & Director) roles, 2 sales-staff, 2 project managers (administrative and tracking) and 6 technical staff completing inspections and testing. The single contractor completes load calculations and enters data into engineering simulation software. Implementing Organization Utility Nonprofit Govt Private IOOther Implementation Structure InHouse TurnkeyContractor InHouseAndSubcontractors Other Reporting and Tracking Program tracks test data (duct test, blower door results), customer participation, $ paid, Grand Opening funds, participant contact info, when contract signed, number of homes under each contract, number of homes started under each contract, sales rep for each contract, equipment size installed, home address. Anniversary reports incorproate downloads from CIS (bill history), calculate over/under Guarantee amount. Maintenance screens: reports show customers on rate with no energy consumption. Load Research meters track demand change over this class and other residential class customers. Forcasting group tracks consumption load curve. Access database, actual customer records and baseline study used to track impact of program. Monthly reports on sales activities, timelines, to determine staffing needs. Monthly payment reports for accounting. Use to respond to customer calls. Anniversary reports to compare actual bills to Guarantee, determine credit eligibility. (Want to set up internet site for customers to run report). Customer who deserve credit get it automatically. Send monthly financial reports. Semi-annual impact reports (consumption curves) to upper management. Give reports by builder to builders who want to include results in their marketing. Compare Guarantee customers to baseline to see how well homes compare. TEP uses the above data as a report card to determine if the program will receive budget approval each year. Forcasting uses data to track consumption load curve and pricing uses load research data Verification and Quality Control - 5
6 First step is load calculation (house can't exceed BTU/ft2 threshold, used to determine Guarantee amount)before construction, TEP attempts to meet with builder and 3 major subcontractors (HVAC, framing, insulation) to review program's construction standards. TEP then conducts 3 on-site inspections: 1. Framing inspection and duct test after intermediate mechanical is completed and before insulation is scheduled 2. Insulation inspection after lath is installed and insulation is complete 3. Final inspection after home is complete and prior to occupancy, includes pressure test, blowerdoor test, verification of equipment requirements and operation, HVAC equipment startup. Every home gets inspected but not all get blower door tests. For a given development, inspector tests a few and then stops unless he/she observes a problem. On HVAC systems, 100% get visual inspections. Inspector performance tests 10--if all 10 pass, then test 1/4 until find failure. (Flexibility if time is short for inspector). Builder must fix any problems identified through the inspections. Program then retests and inspects until problem is solved: No pass, no Guarantee. Participation Process Each participant must submit a set of plans for each model home and then the participant is provided with written standards and verbal explanations. When the process begins, the builder and/or subcontractor calls for inspections and testing. During construction, data is logged into data-base and when the home is complete, the rate is established on the account. TEP guarantees to the homeowner that the home's annual heating and cooling bill will not exceed a specified amount. The guarantee is an important selling point for the builder. The homeowner is mailed a package of information with their guarantee. Monthly downloads of actual energy consumption is collected in data-base and when each home completes 12 months of energy use a graph is generated to determine if the guarantee is met. Outreach, Marketing and Advertising Program staff recruits major builders. ( builders total). Many small builders contact program, get assigned to program rep. Buyers can also call program, request that their builder build to standard. Significant consumer advertising to promote program and builders. Communication strategy emphasizes radio, locator maps in Sunday Homes section, and billboards. Consumer marketing targets people who live in high-end rentals. Installation and Delivery Incentives needed to be offered to convince builders to try new methods of construction. Incentives are designed to offset incremental costs of construction. Once these methods become more commonly practiced and incorporated into building codes, incremental costs and incentive levels go down. Program Evaluation Load research meters to compare peak demand; evaluation of energy use curve compared to standard customers; comparison of guarantee homes to baseline study of homes constructed to standard code requirements; comparison of actual heating and cooling cost to guaranteed heating and cooling costs Pricing department does financial evaluation (audit). Looks at IRR, NPV, cash flow, sensitivities - 6
7 Management sees trued-up actual cost of program. Energy impacts based on customer billing data. Some Guarantee homes get load research meters. Staff reviews impacts by home category. Compares results to baseline sample. Did a baseline study that involved collecting gas data from gas/electric customers. Did weather normalization to allow comparison to later years. Demand is compared to Rate 1 customers. Forecasting group analyzes load curve for forecasting purposes. First 3-4 years of program, builders/subs convened to annual session to provide input on program process. Use feedback to improve process flow. Results: Program is increasingly cost effective, improves load shape. Demand is reduced during peak and demand during non-peak is increased; energy use curve shows reduction during peak and increase in energy use during non-peak months; Actual heating and cooling costs are lower than guaranteed heating and cooling costs in 93-95% of the cases. Quantitative Data Participation rate is available Cost Breakdown is available Net Savings Breakdown is available Net-to-Gross is available Total Resource Cost Data is available Quantative Data Summary: The Guarantee Home Program is a 'self-supporting' program, funded exclusively with shareholder money. TEP must cover annual spending with either additional sales or improved value over time. (demand reduction, avoided costs of peaking units, load factor improvement, branding recognition, etc.) List Of Key Sources Tucson Guarantee Home Program Web site. p. - 7
8 Contact Information Name Title Company Phone Linda Douglas (520) Ext. - 8
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