1 Comments for Workshop on EEU Budget for August 6, 2008

2 2 Outline of Presentation 1.The Boards Questions to Efficiency Vermont 2.Efficiency Vermonts Approach to the Boards Questions 3.Approach to Ramp-up Response 4.Efficiency Vermonts Ramp-up Response 5.Rate of Ramp-up 6.Potential Expansion Strategies 7.Potential Changes in Costs and Savings

3 3 The Boards Questions to EVT Can EVT ramp up the delivery of energy efficiency services as quickly as CLF and VPIRG have proposed? If so, what types of services would be increased or offered for the first time?

4 4 Efficiency Vermonts Approach to the Boards Questions We will seek to meet the Boards objectives for the EEU with whatever budget level we are provided. Our response is preliminary; we have not yet adequately considered all aspects of the proposed ramp-up, including the time necessary for: Planning Development Capacity expansion (both internal and external)

5 5 Our Approach to Ramp-up Response We conducted rough estimate of potential costs and savings for 2011 at the major market level, including consideration of: Trends in technology and market opportunity Recent history and expected % changes in EVT cost / MWh Potential to take target area strategies statewide

6 6 Summary of Efficiency Vermonts Response While challenging, we believe it would be possible to increase spending on cost-effective energy efficiency by 2011 to a budget level commensurate with that proposed by CLF and VPIRG.

7 7 Ramp-Up To ramp up responsibly to the 2011 budget level proposed by CLF and VPIRG, we suggest a ramp-up path that would likely rise more slowly at the beginning: ? ? $30.75 M ? $85 M

8 8 Other Ramp-up Issues Consider ramp-up and ramp-down demands and effects on market partners and customers To minimize market disruption, large ramp- ups should be sustained for several years; and if ramped down, at a gradual pace. What planning assumptions would be made beyond 2011? Would ramped-up levels be maintained?

9 9 Potential Expansion Strategies MarketsKey Ramp-Up Strategies Business Market Opportunities LightingIncrease incentives & more upstream focus HVAC and other Business Market opportunity Increase incentives & more upstream focus Business Retrofit More comprehensive in all retrofit markets Largest Customers (> 500 MWh, account- managed) Expand target area strategies statewide (Account Management) Large Commercial ( MWh) Expand target area strategies statewide (Direct Install) Small Commercial Expand Direct Install to Small Commercial; new vendor-driven options New target / niche markets telecommunications, hospitality, data centers, others tbd New vendor-driven target Initiatives Pay for performance for compressed air, refrigeration, farms, and other technologies and sub-markets tbd Business New Construction Stratgeies tbd for higher market share

10 Potential Expansion Strategies MarketsKey Growth Strategies Retail Efficient Products CFLs Focus on maintaining success and on specialty products with lower adoption rates Appliances and other retail products Strategies for higher market share; refrigerator turn- ins, higher tier incentives Advanced lighting (LEDs)Phase in and aggressive promotion Consumer electronics ENERGY STAR ® PCs, Smart Strips, upstream promotion Residential Existing Homes Home Performance with ENERGY STARExpand participation in HPwES Direct Install lighting / appliances (new)Direct install in targeted communities New technologies for electric DHWRetrofit or Direct Install Feedback / Behavioral Tools that provide customer feedback (e.g., Blue Line; Positive Energy; others tbd) Solar DHWIncentives and promotion (subject to screening) Residential New Construction Strategies for higher market share, deeper savings

11 Supplemental and Back-up Strategies Open solicitation for third-party / vendor proposals Pay for customer energy reduction (similar to California 20/20) – possible tie-in to smart meters Downsize strategies – (e.g., right-sizing equipment, smaller appliances, smaller homes) Next generation, deep direct installation for residential and / or small business

12 Potential Changes in Costs and Savings With savings from CFLs dropping, an expected greater reliance on measures and strategies with higher costs, and more aggressive strategies, the levelized cost of efficiency will likely increase. It would still remain well below avoided supply costs. EVT Levelized Cost / kWh

13 Potential Change in Levelized Cost and TRB / kWh by Major Market

14 Potential Change in Spending by Major Market

15 Planning for CFL Market Transformation In 2007, retail CFLs accounted for: 46% of first-year MWh 42% of Summer Peak MW 26% of lifetime MWh 25% of TRB 14% of costs

16 Planning for CFL Market Transformation EVT is collaborating in the DPS investigation of attribution and savings in the context of the rapidly changing CFL market to inform planning EVTs interim planning for assumes for Retail Efficient Products: 25% reduction in savings per CFL in % reduction in savings per CFL in % reduction in savings per CFL in 2011