Hard-to-Reach Standard Offer Program October 23, 2013

2 Where in Texas? AEP is offering the Hard-to- Reach Standard Offer Program (HTR SOP) through its Texas distribution companies which include AEP Texas Central Company (TCC), AEP Texas North Company (TNC) and Southwestern Electric Power Company (SWEPCO)

3 HTR Successes 2013 YTD TCC – 1,830 Customers Served; 4,071 total installations TNC Customers Served; 629 total installations SWEPCO – 1,314 Customers Served; 2,299 total installations Lower Budgets impact # of Customers Served 2013 numbers are from incentive reports processed/paid through the 3 rd quarter.

4 HTR Successes (continued) TCC:  12 Counties traditionally Underserved experienced measure installations in 2013  Program goals met after first month of program opening TNC:  YTD savings achieved: 233 kW704,398 kWh  2013 Program Goal:240 kW653,561 kWh SWEPCO:  3 Counties traditionally Underserved experienced measure installations in 2013

HTR SOP Summary  Incentives Paid for kW and kWh savings  Internet Application and Reporting  HCA, Income Eligibility Form and Customer Education Material  Small Projects  No minimum project size  Reserve funds for 30 days  Multi-Family  Reserve up to $ 25,000 at a time  Single-Family  Reserve up to $5,000 at a time

2014 KEY CHANGES  Project Sponsors must carry all statutorily required insurance  The 2014 HTR SOP shall utilize the deemed savings values contained in the State of Texas Technical Reference Manual (TRM), unless the PUCT indicates otherwise  Residential dwellings or additions completed after January 1, 2012 do not qualify for the program  Home Energy Rater (HERs) or Building Performance Institute (BPI) individual required to be on staff for any Project Sponsor performing duct efficiency and/or air infiltration measures. HERs or BPI individual required to be listed on Project Sponsor application  Underserved Counties for TNC and SWEPCO have been revised for 2014  A new field to report “# of bedrooms” has been added as a required field on the customer input form  New document upload feature added to the database 6

7 CONTINUING IN 2014  Blower-door testing shall occur immediately prior to the installation of any air infiltration measures at every site. Post-installation testing shall occur immediately following the installation of air infiltration measures at every site  Pre- and post-retrofit duct pressurization testing shall be performed at every site by Project Sponsors implementing the duct efficiency measure to verify and record leakage sealed  Work schedules required for Project Sponsors completing duct efficiency and infiltration measures in Single Family projects  Project Sponsors must provide a work schedule for Multi-Family projects seven (7) days prior to measure installation  Incentive Reports may no longer be submitted the 1st 15 days of each month  All installations must be submitted on an Incentive Report within 45 days of the installation  All host customers must be supplied approved customer education material  Changes to the Host Customer Agreement and Acknowledgement Form to include all Pre and Post CFM readings for Duct Efficiency and Air Infiltration measures and “R” Value of Existing Ceiling Insulation

8 CONTINUING IN 2014 (continued)  CFL measure not eligible in SWEPCO HTR SOP  All ceiling insulation installations must affirm that an insulation installation certificate was permanently affixed near the attic opening  An updated duct tool spreadsheet has been added to the database  Failure to complete prescriptive requirements will result in a total Measure failure regardless of the CFM reading  Homes cooled with window air conditioning units exclusively must be reported as “gas” heat. Electric space heaters are considered “plug-in” load and do not make the home eligible for electric heating type in this program (Air Infiltration and Ceiling Insulation measures)  The air infiltration Deemed Savings include an upper limit of 4 CFM 50 per square foot of house floor area pre-retrofit infiltration rate and this limit will be enforced  All use of marketing, including social media and telemarketing, must be approved by AEP  Different incentive rate for historically underserved measures  Different incentive rate for projects targeting historically underserved counties

9 HTR SOP INCENTIVE BUDGETS Budget Limit per PS  TCC $ 953,417$ 75,000  TNC $ 162,719$ 50,000  SWEPCO $ 562,360$100,000

10 How Do I Participate?  Review Program Manual  Review SOP Agreement  Complete and review on-line application  Submit application via internet  If applicable, upload testing procedures within 24 hours of submitting application

11 What Happens Next?  Applications will be reviewed based on receipt of all required information  Once eligibility has been verified and application pre-approved, enter into a agreement with AEP to install eligible Measures  Refer to Program Manual for additional information

12 Project Sponsor Requirements A Project Sponsor must have:  Adequate insurance (mailed or ed directly to appropriate Program Administrator by insurance agency)  All appropriate licenses  References  Evidence of technical and managerial capabilities and experience  AEP approved customer education material to be distributed to all host customers

13 Incentive Payments & Example

14 Incentive Payment Structure  Four levels, to encourage Project Sponsors:  Installing Standard Single-Family dwelling Measures  Installing Standard Multi-Family dwelling Measures  Installing historically Underserved Measures  Installing Measures in certain historically Underserved Counties kW kWh StandardSingle-Family$360$0.11 Standard Multi-Family$325$0.10 Underserved Measures$400$0.13 Underserved Counties$440$0.15

15 Incentive Payment Limits Load Factor Caps:  For all combined kW and kWh incentive payments, incentive is limited to: $920 per kW

16 Incentive Payment Example Install Measures in Single-Family dwellings resulting in savings of: 48 kW 120,000 kWh Standard Single-Family Incentive Rate: $360/kW$0.11/kWh Total Incentive Payment : $30,480 (before any limits)

17 Underserved Counties - TCC ATASCOSAEDWARDSKINNEYUVALDE BEEFRIOLA SALLEVAL VERDE BROOKSGOLIADLIVE OAKWHARTON CALDWELLGONZALESMAVERICKWILSON COLORADOGUADALUPEMCMULLENZAPATA DE WITTJACKSONMEDINAZAVALA DIMMITJIM WELLSREAL DUVALKENEDYREFUGIO

18 Underserved Counties - TNC BRISCOECOTTLEDICKENS FOARD HALLHARDEMAN KENTKINGKNOX MOTLEYSTONEWALL

19 Underserved Counties - SWEPCO CHILDRESSFRANKLINHOPKINS RED RIVERSMITHUPSHER VAN ZANDTWHEELERWOOD

20 Application Process

21 Create Application  Register on Program website  Complete Project Sponsor Details  Sponsor Profile  Subcontractor Information  Project Description  Qualification Documents  Insurance Information

22 Application Schedule  1 st Day to register  October 24, 2013  Submit applications  December 3, 2013  Implementation begins  February 4, 2014  Must have approved application status  Must have 2014 HCA’s  Must have a budget reservation

23 Multi-Family Projects  Site  Measures  Work Schedule  Duct Description  Individually-metered  $25,000 Budget Reservation  Program Administrator can increase reservations for completion of project per funding availability

24 Identify Project Opportunities  Verify customer eligibility  Original customer signature and date on Income Eligibility Form  Original customer signature and date on Host Customer Agreement & Acknowledgement (HCA) form

25 Install Measures  Reserve funds via internet  Install Measures  Original customer signature and date HCA form to verify completion  If applicable, supply pre and post CFM readings and “R” Value of Existing Ceiling Insulation on HCA.  Provide customer with Approved Educational Materials

26 Reporting  Monthly reporting via internet  Inaccurate reporting results in failures  Un-submitted Measure installations over 45 days old will lock out reservations feature  AEP will process inspection-adjusted Incentive Reports within 45 days under normal circumstances

27 Installation Inspections  Random sample of Measure installations  Verify that number of installed Measures equals number of reported Measures  Verify Measure is installed and capable of performing its intended function (10 yr measure life expectancy)  Verify that Measures qualify and that installation standards were followed

Program Issues  Inaccurate pre assessments, i.e. incorrect levels of existing ceiling insulation reported, incorrect heating type reported  Failure to perform pre-retrofit installation blower-door and duct blaster tests  Failure to perform post-installation blower-door and duct blaster tests  HCA’s and Installations done prior to application approval  Submitting incomplete forms (HCA, income eligibility forms)  Failure to complete daily work schedule  Multi-Family/Single-Family reservations (only one open at a time)  Use of unapproved marketing material. All marketing material must be approved, including social media  Failure to report measure installation within 45 days of the installation date

Program Issues (continued)  Door weather-stripping; customer(s) must be able to close and shut door(s) with minimum effort after installation  CFLs installed in non-common areas (e.g, closets, pantries)  Customer educational material not being supplied  Must inform customer of inspection possibility  Provide best daytime contact phone #’s  Measures installed should provide an expected life of at least 10 yrs with the exception of CFLs. The following are deemed unacceptable  Taping attic access doors and filter access panels  Plumbing penetrations not covered effectively or with non-rigid material  Supply registers not removed to be sealed nor serviced from attic space  Caulking reported but not found in rooms specified (door frames, baseboards, windows)

30 Program Website Refer to for:  SOP schedule  Latest program announcements  Available funding  FAQ’s  Program Manual  Program contact information

31 AEP Contact Information  TCC – Vee Strauss  Phone:   TNC – Steve Mutiso  Phone:   SWEPCO – Jeff Thigpen  Phone: 

32 Comments and Questions……………….