BLACK HILLS ENERGY 2016 Energy Efficiency Portfolio Annual Results Overview December 8, 2016 10:00am – 12:00pm MST Mark James – Energy Efficiency Program Coordinator Jim Dillon – Energy Efficiency Senior Manager Fred Stoffel – Director Regulatory Affairs

Agenda Portfolio Overview – YTD numbers as of 11/30/2016 Residential Energy Efficiency Programs Commercial/Industrial Energy Efficiency Programs Special Programs 2016 Energy Efficiency Portfolio Projections 2016 Work In-process Changes to Programs (60-Day Notices) Residential High Efficiency Lighting Program Low Income Assistance Program Demand Response Pilot Investigation Self-Direct Custom Program & Fountain Valley Authority 2016 EM&V Evaluations Potential New Measures Discussion Questions & Comments

Energy Efficiency Portfolio Results YTD 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $5,960,126 $3,496,415 59% 16,925,245 15,082,366 89% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 198,836 144,596 73% 4,916 2,418 49% *kW & kWh results reported are at the meter, not generator. All kW & kWh savings are as of 11/30/2016; Budget data is as of 10/31/2016 Measure installation/completion deadline is 12/31/2016 Rebate applications for work completed in 2016 must be received by 1/31/2017 Vendors must have all invoices submitted for 2016 by 2/1/2017 All kW & kWh savings are prior to any EM&V evaluation adjustments

Residential Energy Efficiency Programs High Efficiency Lighting Program Appliance Recycling Program On-Site Energy Evaluation Program High Efficiency Cooling Program Home Energy Comparison Report Program

High Efficiency Lighting Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $516,018 $450,816 87% 2,811,718 3,300,022 117% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 161,875 115,347 71% 324 303 94% *kW & kWh results reported are at the meter, not generator. Additional kW & kWh savings will add to the totals above for program year 2016.

Appliance Recycling Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $47,755 $17,236 36% 170,879 26,809 16% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 310 22 7% 3 14% *kW & kWh results reported are at the meter, not generator. JACO was third party implementation contractor used for appliance recycling program. JACO went out of business and new contractor was selected, Appliance Recycling Centers of America (ARCA). ARCA began appliance recycling in Aug/Sep 2016. Additional marketing will take place in 2016 to increase participation and ARCA will have a full calendar year to do appliance recycling in program year 2017.

On-Site Energy Evaluation Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $313,786 $240,189 77% 260,739 28,009 11% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 1,000 239 24% 89 95 106% *kW & kWh results reported are at the meter, not generator. Participation in on-site energy evaluations is lower than expected. Additional marketing will be done in 2017 to promote program. Lower participation resulted in lower kWh savings achieved.

High Efficiency Cooling Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $165,460 $141,258 85% 517,005 267,550 52% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 602 187 31% 538 284 53% *kW & kWh results reported are at the meter, not generator. t Participation in high efficiency cooling is lower than expected. Lower participation resulted in lower kW & kWh savings achieved. Mild summer temperatures probably contributed to lower participation. Additional marketing will be done in 2017 to promote program.

Home Energy Comparison Report Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $284,960 $259,835 91% 2,260,000 3,859,703 171% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 30,000 100% 470 0% *kW & kWh results reported are at the meter, not generator. High participation in home energy comparison report resulted in higher than expected kW and kWh savings. 3,859,703 kWh’s are actual/banked as of 10/01/2016 kW savings will be reported at year-end.

Commercial/Industrial Energy Efficiency Programs New Construction Program Custom Program Self-Direct Custom Program Prescriptive Program Lighting Program

New Construction Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $47,289 $197,292 417% 143,413 691,267 482% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 1 2 200% 41 119 290% *kW & kWh results reported are at the meter, not generator. Higher than expected participation in new construction program resulted in higher kW and kWh savings. Usually takes 3-5 years to build a pipeline of new construction applications/projects.

% of Participation Achieved Custom Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $632,130 $801,375 127% 1,889,619 4,481,984 237% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 38 49 129% 319 683 214% *kW & kWh results reported are at the meter, not generator. Seventeen large, custom lighting projects contributed to higher participation and kW & kWh savings. Other projects include: Custom – 33; Chiller – 1; Other Commercial – 1.

Self-Direct Custom Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $33,270 $15,578 47% 99,454 0% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 2 17 *kW & kWh results reported are at the meter, not generator. Fountain Valley Authority (FVA) has one in-process project. Project is finalized and is expected to be paid in Dec 2016. Project Data: $29,838.60 Rebate Credit; 277,997 kWh Savings; and 0 kW savings. FVA will be completing two additional Self-Direct Custom Program projects in 2018.

% of Participation Achieved Prescriptive Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $147,890 $134,443 91% 273,113 320,429 117% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 60 87 145% 234 138 60% *kW & kWh results reported are at the meter, not generator. Major contributors to kW & kWh savings: Anti-Sweat Control in Display Cases; CAC, ECM Motors; NEMA Premium Motors, VFD’s, Occupancy Sensors and Water Source Heat Pump System.

% of Participation Achieved Lighting Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $2,084,728 $712,061 34% 6,485,416 1,558,765 24% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 559 1,089 195% 1,903 1,949 124% *kW & kWh results reported are at the meter, not generator. Prescriptive Lighting Program (Option1) & Small Business Direct Install (SBDI) Lighting Program (Option 2) have under performed. However, several lighting projects were done in the Custom Program, which is over performing. More marketing will be done with Option 1 & 2 to achieve better results. Conversion rate within SBDI Lighting Program remains low in comparison to like electric utilities.

Special Programs Low Income Assistance Program School Based Energy Education Program

Low Income Assistance Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $840,776 $388,532 46% 929,404 411,863 44% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 1,889 641 34% 835 416 50% *kW & kWh results reported are at the meter, not generator. Lower than expected participation is resulting in lower than expected kW & kWh savings. A 60-Day Notice to redesign the Low Income Assistance Program will be submitted to the Colorado Public Utilities Commission in Dec 2016. Part of program redesign is to partner with Energy Outreach Colorado for administration of program and expand low income assistance program offerings.

School Based Energy Education Program 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $187,250 $177,877 95% 1,084,487 162,774 15% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 2,500 349 14% 124 18 *kW & kWh results reported are at the meter, not generator. Program is for 500 high school and 2,000 middle school students. Program was initiated within the economics/finance curriculum. Projected program results are: 2,500 participants; 1,014,796 kWh savings and 116 kW savings. kW & kWh savings are reported before year-end.

Projected Portfolio Results 2016 2016 Budget 2016 Spending YTD % of Budget Spent 2016 kWh Goal* 2016 kWh YTD Achieved* % of kWh Goal Achieved* $5,960,126 $5,000,000 84% 16,925,245 16,675,159 98% 2016 Participant Goal 2016 Participation YTD % of Participation Achieved kW 2016 kW YTD Achieved* % of kW Goal Achieved* 198,836 169,010 85% 4,916 3,195 65% *kW & kWh projections are at the meter, not generator. Estimate an additional $1,503,585 to be accrued by the end of the year Projected 1,592,793 kWh for the balance of the year. - Estimated 1,014,796 kWh from School Based Energy Education Program - Estimated 277,997 kWh from Self-Direct Custom Program - Estimated 250,000 kWh from C&I DSM programs - Estimated 50,000 kWh from residential DSM programs -These numbers are prior to any EM&V evaluation adjustments

2016 Work in Progress 60-Day Notice, Residential High Efficiency Lighting Program Will be e-filed with CO PUC in Dec 2016 Recommendation to eliminate CFL measure Eligible measures will be standard LEDs & specialty LEDs Proposed change will result in the following increases: Participation Increase: 2017 = 2.77%; 2018 = 9.09% kWh Savings Goal @ Meter: 2017 = 25%; 2018 = 32% kW Savings Goal @ Meter: 2017 = 25%; 2018 = 32% No increase in approved 2017 & 2018 program budgets After 60-Day Notice is e-filed with CO PUC, it will also be emailed to all parties on Certificate of Service in Proceeding No. 15A-0424E and posted on BHE-COE’s website.

2016 Work in Progress 60-Day Notice, Low Income Assistance Program Will be e-filed with CO PUC in Dec 2016 Recommendation to redesign program Single Family Weatherization Program Multi-Family Weatherization Program (custom) Non-Profit Energy Efficiency Program (NEEP) (custom) Direct Install Measures Program Will maintain same eligible measures 2017 & 2018 participation, kW savings goal, kWh savings goal and budget will remain unchanged. Request for 25% non-energy benefits adder for mTRC (low income assistance program only) After 60-Day Notice is e-filed with CO PUC, it will also be emailed to all parties on Certificate of Service in Proceeding No. 15A-0424E and posted on BHE-COE’s website.

2016 Work in Progress Working with Fountain Valley Authority on Self-Direct Custom Program projects Demand Response Pilot Program Investigation Met in 2016 & determined pilot program is not feasible BHE-COE has excess capacity and does not need further demand/peak demand reductions based on previously filed Electric Resource Plan (ERP) Need consensus to discontinue future pilot program quarterly meetings 2017 Program Applications being approved & printed Completing set-up and tracking for all 2017 programs

2016 EM&V Evaluations Low Income Assistance Program (Sector: Residential) On-Site Energy Evaluation Program (Sector: Residential) Home Energy Comparison Report Program (Sector: Residential) Appliance Recycling Program (Sector: Residential) EM&V reports due to BHE-COE in Feb/Mar 2017 EM&V Tracker is used to track EM&V recommendations and action(s) taken on EM&V recommendations to DSM program

Potential New Measures Open discussion of future, potential DSM measures for consideration Open discussion for all participants

Questions & Comments