UES Measure Updates: Refrigerator and Freezer Recycling Adam Hadley Regional Technical Forum June 16, 2015

Overview Today, we are seeking RTF approval of the updates to the Refrigerator and Freezer Decommissioning UES measure. Updated Energy Savings – Efficient-case updated with recent RTF refrigerator and freezer analysis – Baseline updated with 2014 JACO program data New-ish unit energy use updated to reflect updated efficient-case unit energy use and federal test procedure change Updated Cost – Program Cost Updated – Proposal is to include the costs of “early replacements” and “induced replacements”, where they apply 2

Measure Overview CAT Team ReviewYes, in detail Tech Sub-Com Review No official subcommittee, but proposed cost approach (per “rev2” presentation) was reviewed by the following people through /phone calls with Adam Hadley: Bob Nicholas and Sam Sirkin (JACO) (Program Implementation Company) - Concern about lack of subcommittee review of replacement costs - Would like time for official subcommittee review Phil Sisson (Sisson and Associates) (Refrigerator Recycling Measure Expert, Technical Contractor to JACO) - Concerned about new unit replacement costs being quantified “in perpetuity” Kate Bushman, M. Sami Khawaja, Jason Christensen (Cadmus) (Program Impact Evaluation Company) - Agree with the approach for costs of induced replacement Doug Bruchs (Cadeo, formerly with Cadmus) (Refrigerator Recycling Measure Expert, Authored UMP for this measure) - Agrees with approach from high level; not familiar enough with the Regional Cost Effectiveness test to comment on appropriateness of approach for the RTF Notes Last RTF decision was May 2014 Sunset date was set to June 2015 to update measure with refrigerator and freezer federal standard changes 3 Please note: The opinions of the people/organizations as stated above are as interpreted by Adam Hadley.

Energy Savings: Changes Updated New Replacement-unit’s Energy Use (Represents a portion of the efficient-case) – Based on recent RTF fridge/freezer analysis (Oct 2014) – Refrigerator Previous: 491 kWh/yr (v3.0 workbook) Proposed: 570 kWh/yr (ResRefrigeratorsAndFreezers_v4.0) – Freezer Previous: 500 kWh/yr (v2.2 workbook) Proposed: 389 kWh/yr (ResRefrigeratorsAndFreezers_v4.0) Updated Replaced-unit’s Energy use (Baseline) – New JACO Data Update database with units recycled in 2014 JACO programs. (Energy consumption assigned based on model year.) – Update Newer Unit Energy Consumption (Refrigerators only) Based on crosswalk from old-to-new federal test procedure (~15% more energy use) Also aligns the new replacement unit’s energy use (570 kWh/yr) See next slide for further explanation – While complicated, this increases savings for refrigerators by less than 2% 4 TypePreviousProposed Refrigerator1,274 kWh/yr1,239 kWh/yr Freezer1,509 kWh/yr1,325 kWh/yr

5 Increased energy use of units by ~15% based on revised federal test procedure Set 2011 to 2015 units at 570 kWh/yr (RTF Baseline)

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Previously, measure cost estimated at $125/unit (2012$’s). – Summary Sheet: “All program costs, including all direct implementation, incentives, and marketing costs for all utilities that JACO serves across the NW region, are summed and divided by number of units recycled to arrive at a cost per unit recycled.” Proposed revised estimate: $114 (2015$’s) – JACO program costs have gone down: lower incentives, mostly Does not include A.Cost of early replacement B.Cost of induced replacement… Measure Cost: Changes 7

Proposal: Add cost of Replacement Units – Induced Replacement – Where the program caused purchase of a unit that otherwise wouldn’t have been purchased – Early Replacement – Where the program caused early replacement of an existing unit – The induced replacement cost or the early replacement cost is used, depending on the circumstances, as shown on upcoming slides (“logic maps”) – Cost only incurred where replacement unit is new because purchase of a used unit represents a transfer payment within Region: How many are new units? Same values as used in energy savings calculations Refrigerators – “Brother-in-Law” (R2): 59% » ADM CA Statewide survey – Participant (R1): 78% » Source: JACO Program Data Freezers: 100% Measure Cost: Changes (continued) 8

Early Replacement Cost Methodology Mimics calculations ProCost uses where costs or benefits are truncated by program life 9 Notes: This example is for refrigerators, the same methodology is used for freezers. All costs are in 2006$’s. PV of Cost of Purchasing New: $942 Real Discount Rate: 5% EUL (new unit): 15.2 years Annualized Constant Payment for life of new equipment: $90 RUL (replaced unit): 6.4 years Early Replacement Cost = $942 – Sum(Red Bubble)

10 Refrigerator Replacement Cost Logic Map

11 Freezer Replacement Cost Logic Map

12 No change to non-energy benefit Program, etc. Costs (no replacement costs) Program, etc. Costs Replacement Costs

Cost-Effectiveness Methodology Question Should the Risk-Mitigation Credit apply? – In the current measure, the “Retrofit” risk- mitigation credit of 43 mills/kWh is used – This was questioned at the May 2014 meeting, but not acted on Minutes from May 2014: See page 7, starting at Eckman Minutes – Key points: » Not analytically rigorous to include risk-mitigation credit for a short measure that doesn’t replenish itself » RTF was uncomfortable dealing with the issue at that time; instead wanted to take it up with the Guidelines edits 13

14 There was a <1% increase in measure life years, based on the program data update.

Proposed Motion “I _________ move the RTF approve the updates in savings and cost for the Refrigerator and Freezer Decommissioning measure UES and set the sunset date to June The risk-mitigation credit (should) or (should not) be used in the cost-effectiveness calculation.” 15 Purpose of the 2-year sunset date would be to update the measure with 2015 and 2016 program data and any other newly available evaluation data.

Additional Slides 16

Difference between this presentation and what was posted earlier Last week (~ June 9), CAT posted to the meeting agenda a presentation (rev 2) and workbook that showed a different method of calculating the additional proposed early replacement costs (using the cost of buying early as a perpetuity, etc.) While the results of the methodology shown in this presentation and the previous presentation are the same, this presentation explains the methodology as is done in ProCost (for consistency and simplicity of explanation) 17