©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY DISPUTES & INVESTIGATIONS ECONOMICS FINANCIAL ADVISORY MANAGEMENT CONSULTING September 18, 2012 P HASE II: U NIT E NERGY S AVINGS (UES) M EASURE C OMPLIANCE : RTF M EETING Navigant Presentation Presented by Mohit Singh- Chhabra, Ryan Firestone and Kevin Cooney Navigant Reference:

1 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Content of Report This presentation was prepared by Navigant Consulting, Inc. exclusively for the benefit and internal use of Regional Technical Forum and/or its affiliates or subsidiaries. No part of it may be circulated, quoted, or reproduced for distribution outside these organization(s) without prior written approval from Navigant Consulting, Inc. The work presented in this report represents our best efforts and judgments based on the information available at the time this report was prepared. Navigant Consulting, Inc. is not responsible for the reader’s use of, or reliance upon, the report, nor any decisions based on the report. NAVIGANT CONSULTING, INC. MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED. Readers of the report are advised that they assume all liabilities incurred by them, or third parties, as a result of their reliance on the report, or the data, information, findings and opinions contained in the report. June 21, 2012 ©2011 Navigant Consulting, Inc. All rights reserved. Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public accounting services. See for a complete listing of private investigator licenses. Investment banking, private placement, merger, acquisition and divestiture services offered through Navigant Capital Advisors, LLC., Member FINRA/SIPC.

2 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Contents Table of Contents 2Refrigerator and Freezer Recycling 3Commercial Refrigerators and Freezers 1 Residential Manufactured Housing Duct Sealing

3 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Residential Manufactured Home Duct Sealing Measure Classifications and Properties Market SectorResidential Market SegmentManufactured Home Measure CategoryDuct Sealing Measure Description Improvements made to ducts in existing manufactured homes to reduce air leakage. Duct sealing must be carried out in accordance with the PTCS (Performance Tested Comfort Sealing) duct sealing specification. Sunset Criteria8/2/2015 Primary WorkbookProCostRTFTemplate257f_v3_9_RES_DUCT_SEAL xlsm Linked Workbooks and Settings/Adam/My Documents/Consulting/Council/SEEM/SEEM92dist/ExistingResidentialManufacturedH ome_SEEMRuns_02.xlsm, acturedHome_SEEM94Runs_03a.xlsm Number of Measures, and UES ComponentsNine measures, each comprising the sum of two UES components

4 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Actions Taken to Bring Measure Into Compliance Residential Manufactured Home Duct Sealing TaskTask SourceNotes Workbook calculation errors in the SEEM workbook need to be fixed. Recommendations MemoCompleted Workbook structure and formulae need to be updated to link to latest SEEM workbook, Pro-Cost models need to be rerun, and the measure needs to be re-analyzed using the latest version of SEEM Recommendations MemoCompleted Documentation updates include clarifying duct leakage assumptions and updating the PTCS (Performance Tested Comfort Systems) standard, possibly to the ACCA (Air Conditioning Contractors of America) standard. Recommendations MemoIn Progress

5 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Summary of Actions Taken on Residential MH Duct Sealing Residential Manufactured Home Duct Sealing Actions taken to date: Imported previous residential manufactured home duct sealing workbook into new RTF workbook template. Linked workbook to latest version of SEEM, and updated measure savings based on the current SEEM output. Researched documentation sources to update current estimates for pre-retrofit supply duct leakage fraction (15%) and post-retrofit supply duct leakage fraction (5%). Outstanding actions to take: Update pre- and post-retrofit supply duct leakage fraction estimates and document source. Planning to use data from the Performance Tested Comfort Systems (PTCS) data to inform pre- and post- leakage estimates.

6 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY HEATING Savings Results Comparison (based on updated SEEM results) Residential Manufactured Home Duct Sealing Note: Zones refer to RTF heating zones 1, 2, and 3. Analysis assumes current pre- and post-supply leakage fraction estimates of 15% and 5%, respectively.

7 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY COOLING Savings Results Comparison (based on updated SEEM results) Residential Manufactured Home Duct Sealing Note: Zones refer to RTF heating zones 1, 2, and 3. Analysis assumes current pre- and post-supply leakage fraction estimates of 15% and 5%, respectively.

8 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY TRC Results Comparison (based on updated SEEM results) Residential Manufactured Home Duct Sealing Note: Zones refer to RTF heating zones 1, 2, and 3. Analysis assumes current pre- and post-supply leakage fraction estimates of 15% and 5%, respectively. TRC = 1

9 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Contents Table of Contents 2Refrigerator and Freezer Recycling 3Commercial Refrigerators and Freezers 1 Residential Manufactured Housing Duct Sealing

10 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Refrigerator and Freezer Recycling Measure Description and Properties Market SectorResidential Market SegmentAll Segments Measure CategoryRefrigerators Measure Description Decommisioning and recycling of functional refrigerator or freezer Sunset Criteria6/29/2014 Primary Workbook:FrigRecycle_FY10v2_3 Linked Workbooks Number of Measures, and UES Components 2 measures: Refrigerator decommissioning Freezer decommissioning

11 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Refrigerator and Freezer Recycling Actions taken to date Once Navigant receives data from JACO, the workbook will be updated with new program data.

12 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Refrigerator and Freezer Recycling Mortality distribution of residential appliances can be characterized using the Weibull distribution. ApplianceShape Factor (A)Scale parameter (B)Mean Life (EUL) Refrigerator A generalized survival curve is developed using SHEU data. A survival curve takes into account that equipment has a lower failure rate at earlier service years. Effective Useful Life ( EUL) is defined as the time when equipment mortality is 50% e.g. 50% of all refrigerators would have failed at years. Datasource: Survey of Household Energy Use (SHEU) Curve parameters

13 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Refrigerator and Freezer Recycling To apply the general survival curve, the service years is normalized using the EUL. This curve will be applicable to refrigerator technologies with different EULs. Same graph, but with service year normalized by EUL As seen in the graph, when service year equals to EUL, the Fraction of Units remaining equals to 0.5. As service year approaches two times the EUL, fraction of units remaining approaches 0. For an example, if the EUL of a refrigerator is 20 years, a small fraction (near 0%) of these refrigerators will be working past age 40.

14 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Refrigerator and Freezer Recycling To calculate RUL from the survival curve, take the sum of the area under the curve. For example, if a measure has an EUL of 16 years, and the equipment is recycled at year 16, the RUL will be the definite integral from 1.0 on the x-axis to the right end of the curve. The integral of the above example is 0.24 which means the RUL of the refrigerator is 16*0.24 = 3.84 remaining years. Similarly, if the refrigerator EUL is 25 years, and the refrigerator is recycled at year 25, the RUL will be 25*0.24= 6 remaining years.

15 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Refrigerator and Freezer Recycling A curve of RUL vs service year is derived from the previous curve to facilitate calculation of RUL using service life and EUL. EUL16.18 Service (year) SY- Fraction of EUL RUL-Fraction of EUL RUL (Years) As EUL increases, RUL increases given same service year (age at recycle) As service year increases, RUL decreases given same EUL. EUL Source: US D.O.E

16 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Refrigerator and Freezer Recycling Using the survival curve approach to calculate Remaining Useful Life can take into account failure rates of equipment at different age. The RUL will vary according to the age of the recycled appliance. Key takeaways: Residential appliance’s mortality distribution can be characterized by the Weibull distribution. By normalizing service years in terms of the EUL; we can apply the equipment mortality curve to equipment with different EUL’s. Accordingly, the RUL will scale with the change in EUL. Using this proposed method, as service year (year at which equipment is recycled) increases, RUL decreases. RUL approaches 0 as service years approaches twice the EUL.

17 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Refrigerator and Freezer Recycling Normalized Weibull Curve fit to appliance data collected by SHEU.

18 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Contents Table of Contents 2Refrigerator and Freezer Recycling 3Commercial Refrigerators and Freezers 1 Residential Manufactured Housing Duct Sealing

19 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Actions Taken to Bring Measure Into Compliance Commercial Refrigerators & Freezers TaskTask SourceNotes Baseline and Measure UEC development for all configuration types contained on the same worksheet. Recommendations MemoCompleted Update Sunset Criteria to account for the uniform testing standards that DOE will use for commercial refrigerators, freezers, and refrigerator-freezers effective on or after January 1, 2016 Recommendations MemoCompleted Energy Star market share weight of 72% Energy Star entries and 28% non-Energy Star entries incorporated into the baseline UEC Recommendations MemoCompleted Documentation updates including data extraction dates and location of where datasets were obtained Recommendations MemoIn Progress Update datasets used in the workbook using a combination of the California Energy Comission (CEC) appliance dataset and the Energy Star (ES) qualifying product list. Recommendations MemoIn Progress

20 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 2012 CEC Database Update Shows a very High Level of Market Share for Energy Star Refrigerators and Freezers ( Increased to approx. 70% from 20 %) Commercial Refrigerators & Freezers Commercial refrigerators and freezers have become more efficient since the last workbook review due to changes in federal minimum efficiency standards in January The previous 2009 CEE and 2008 NRCAN datasets show approximately 25% of the commercial self-contained refrigeration units available on market meet Energy Star v.2.0 standards. The update 2012 CEC dataset shows approximately 65% of the commercial self- contained refrigerators and 70% of the commercial self-contained freezers on the market meet Energy Star v.2.0 standards. According to the recommendations memo and the 2010 Energy Star Market Penetration Report, U.S shipment data within the Energy Star report 1 shows that the Energy Star market share for commercial refrigerators and freezers is 72%. 1 Energy Star Unit Shipment and Market Penetration Report Calendar Year 2010 Summary. The response rate of Energy Star partners that submitted 2008 unit shipment data was 100% for commercial refrigerators and freezers. Can be found at: Accessed 1/19/2012

21 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Refrigerators Measure Description and Properties Measure Classification and Properties Market Sector Commercial Market Segment Food Services Measure Category Refrigeration Measure Description Replacement of a commercial non-Energy Star refrigerator with a qualifying Energy Star v2 commercial refrigerator Sunset Criteria New Federal Testing Standards will be effective January 1, 2016; at this time updates should be applied to the product datasets that are affected by the new DOE testing standards for commercial refrigerators Primary Workbook ProCostRTFTemplate257f_v3_9_SPLIT_Template_ _ REF v08.xlsm Linked Workbooks No External links Number of Measures, and UES Components 10 measures total [1)Solid Door Refrigerator x 4 Sizes + 2) Glass Door Refrigerator x 4 Sizes + 3) Solid Door Chest Refrigerator + 4) Glass Door Chest Refrigerator] based on one UES component

22 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 2012 CEC Database update shows a very high level of product availability for Energy Star refrigerators and freezers Commercial Refrigerators

23 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Savings Results Comparison Commercial Refrigerators After update savings values are lower than the Prior to Update values due to the increased level of product availability for Energy Star Refrigerators in the CEC dataset. Solid door refrigerators in two categories ( 50 cu. Ft.) have 0 savings as CEC data set shows 100 % ES. Market share. Baseline efficiency value, according to CEC database, is higher than the minimum Energy Star criteria.

24 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Incremental Cost Results Comparison Commercial Refrigerators According to existing cost data (from six different sources including the CEE), incremental cost for Energy Star solid door refrigerators is less than the baseline cost.

25 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY TRC Results Comparison Commercial Refrigerators Both Prior to Update and After Update Energy Star Solid Door Refrigerators had TRC values of 9999 for all size categories due to negative incremental costs. Both Solid Door and Glass Door Energy Star Chest Refrigerators had TRC values of 0 Prior and After the update. TRC = 1

26 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Freezers Measure Description and Properties Market Sector Commercial Market Segment Food Services Measure Category Refrigeration Measure Description Replacement of a commercial non-Energy Star freezer with a qualifying Energy Star v2 commercial freezer Sunset Criteria New Federal Testing Standards will be effective January 1, 2016; at this time updates should be applied to the product datasets that are affected by the new DOE testing standards for commercial freezers Primary Workbook ProCostRTFTemplate257f_v3_9_SPLIT_Template_ _ FRZ v07.xlsm Linked Workbooks No External links Number of Measures, and UES Components 10 measures total [1)Solid Door Freezer x 4 Sizes + 2) Glass Door Freezer x 4 Sizes + 3) Solid Door Chest Freezer + 4) Glass Door Chest Freezer] based on one UES component

27 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 2012 CEC Database update shows a very high level of product availability for Energy Star refrigerators and freezers Commercial Freezers

28 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Savings Results Comparison Commercial Freezers After update savings values are lower than the Prior to Update values due to the increased level of product availability for Energy Star Freezers in the CEC dataset. No data on Solid Door Freezers less than 15 cu. Ft. available in CEC dataset No savings for Solid Door Freezers > 50 cu. ft. as Energy Star market share is 100 %. Glass Door Freezers, 15 cu. ft. and. 50 cu. ft., no units in CEC database meet Energy Star Criteria.

29 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Incremental Cost Results Comparison Commercial Freezers According to existing cost data (from six different sources including the CEE), incremental cost for Energy Star chest freezers is less than the baseline cost.

30 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY TRC Results Comparison Commercial Freezers Both Prior to Update and After Update Energy Star Solid Door and Glass Door Chest Freezers had TRC values of 9999 due to negative incremental costs. The After Update Less than 15 Cu. Ft and 50 Cu Ft and Greater Energy Star Solid and Glass Door Freezers have TRC values of 0. TRC = 1