Customer Segmentation: “Whole Neighborhood Approach” LIEE/CARE IOU Budget Applications Workshop CPUC Energy Division July 17, 2008

2 Objective for today’s workshop Discuss “Whole Neighborhood Approach” model to program delivery  Based on Commission directives and “best practices” in IOU budget applications  Pursues more efficient and less expensive ways to deliver LIEE program Determine what additional categories for customer segmentation should be pursued

3 KEMA Needs Assessment “In the spirit of trying to establish an optimal LIEE Program design - which presumably would be to provide immediate energy savings benefits to as many low income households as possible at the lowest possible cost - the Commission must encourage the utilities to find better, more efficient and less expensive ways to deliver energy saving measures…”

4 KEMA Needs Assessment “Only a small portion of low income households are in need of comprehensive, energy efficiency upgrades and most, in fact, on average, all low income households have an immediate need for relatively low-cost (low impact measures)… Essentially, the process used to identify households who only have a need for a few of these low cost items is the same as that which is used to identify and qualify households who have much more significant needs.”

5 Staff Proposed Delivery Model ALJ Ruling Requested Comments on September 27, 2007

6 Commission Guidance in Decision Directives for LIEE Program:  Emphasize opportunities to save energy Customer segmentation by energy usage will be included in new model  Pursue cost-effective means of program delivery  Take advantage of other resources and programs  Provide customers with ways to reduce their bills and improve their quality of life

7 Strategic Plan for Energy Efficiency (Draft issued July 14, 2008) Goal 1: Improve Customer Outreach  Strategy: Improve Program Delivery Near Term Strategy: Use information from segmentation analysis to achieve efficiencies in program delivery Goal 2: LIEE is an Energy Resource  Strategy: Increase delivery of efficiency programs by identifying segmented concentrations of customers Near Term Strategy: Identify and develop segmented approach to deliver services and improve use of CBOs in delivering services Segmentation approach “will improve the efficiency of delivery by identifying geographic and social concentrations of customers to achieve economies in delivery, material purchasing and resources.”

8 Step 1: Identify Low Income Neighborhood (Locate concentration of low income customers in specific geographic area to target) Actor Strategy Objective Utility Locate pockets of low income customers using demographic information (ex. Zip7) Locate pockets of low income customers using CARE lists Locate pockets of low income customers with high energy usage Locate neighborhoods in need of revitalization Low income customers in specific geographic area identified

9 Step 2: Target Low Income Neighborhood (Conduct outreach to low income customers in specific geographic area) Actor Strategy Objective Utility CBOs Contractors Submit press releases to local media Leverage and partner with local entities Deploy “mobile energy units” to area Door-to-door outreach and canvassing Utilize CARE outreach and marketing Outreach at community events Low income customers in urban and rural neighborhoods targeted Low income customers in urban neighborhoods targeted Low income customers in rural neighborhoods targeted Direct mailing to customers in area Send blasts to customers in area

10 Step 3: Assess Homes in Low Income Neighborhood, Install Measures and Inspect Actor Strategy Objective Assess climate zone Assess energy usage Assess energy burden CBOs Contractors Conduct energy audits in specific geographic area, household by household Assess household type (1) Determine measures to install (2) Install Measures (3) Conduct Inspections

11 Whole Neighborhood Approach  Encourages involvement by local organizations and entities, in turn promoting “leveraging” opportunities  Achieves a more cost-effective approach to program delivery  Outreach and marketing  Assessment, measure installation, and inspections  Reduces transportation costs, in turn reducing “carbon footprint” of LIEE program  Maintains programmatic focus on installation of measures  Utilizes social networks and makes program delivery a community event

12 Customer Segmentation in Program Delivery Energy Usage Energy Burden Energy Insecurity Climate zones Housing type Renters v. owners Master metered Head of household disabled/medical baseline Late payment history Language Family size Seniors Near homeless

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