1. Energy Service Programs By: Michael Volker & Brian Dreiling

2. Services Provided Blower Door* Establish a minimum ventilation guideline Combustion Safety Energy Rating Energy discloser Load Calculations IR Scans General Walk Through Energy Audits * Required on all new houses in the City of Hays.

3. Background 1995 Safety issues in a high profile house Building Codes on Combustion Safety Buildings of “Ordinary Tightness” Air from inside the building Building of “Unusually Tight Construction” Air from external source Building Codes on Ventilation Air Minimum ventilation guideline (MVG)

4. Evolution of the Program Over 400 Energy Ratings in the City of Hays Improved Combustion Zone Procedures Isolation of the combustion appliances Sealed combustion appliances Ventilation Guidelines Use of whole house heat exchanger ventilators Improved Energy Construction Techniques Reduction in air leakage Higher insulation levels Low Income Assistance Program Surplus franchise fees 140 Basic energy audits in 2006

5. Results: Reduced Air Leakage

6. Doing More of a Good Thing

7. Questions: Does offering Energy Services provide benefit to Midwest Energy? Does offering Energy Services provide benefit to our customers? Answers: 2004 Energy Service Study Why Do This???

8. Energy Services Evaluation Internal Cost Study $.10 per residential customer per month (2003) $.15 per residential customer per month (2006) Plus lost utility revenues. External Value Study $.37 per residential customer per month Utility Costs & Benefits

9. What Is It Worth to Provide Energy Services? Average value is based on the percent of customers times the monthly value. Conservative Average = $0.37 per month per bill Energy Services Survey Value of Energy Services

10. The Importance of Offering Energy Services Customers who have used services place higher importance on MWE offering them. Customers who say each service is important (8-10 ratings) Energy Services Survey The Importance of Energy Services

11. Adjusted Satisfaction and Value Perception Customers who have used services feel they receive greater value and have much higher satisfaction with MWE Energy Services Survey Overall Satisfaction and Value Perception Customers responding somewhat or very high (8-10 ratings)

12. Customer awareness is low; approximately 20%. Midwest Residential customers feel the services are worth $0.37 per month per bill. Overall customer satisfaction and value perception improve with awareness or use of energy services. Energy service users are candidates for other services. Energy Services Evaluation Key Survey Conclusions

13. Why Utilities Do Not Like Conservation Programs Customer Rates 1.Customer Charge ($8/Mo.) 2.Base Rate ($1.50/MMBtu) Average Monthly Bill: $8.00 (Monthly Cust. Charge) + $12.00 ($1.50/MMBtu x 8MMBtu’s $20.00 Total Utility Bill Utility Costs 1.Fixed Costs ($20/Mo.) 2.Variable Costs ($0/MMBtu) Average Utility Costs: $20.00 (Fixed Costs) + $0.00 (Variable Costs) $20.00 Total Utility Costs What happens to the Utility if volumes decline?

14. Challenges: Lost Utility Revenue Volume Erosion………. M System Residential – Down 3.1% per year. K System Residential – Down 2.3% per year. …….Equals Profitability Erosion Over 50% of Utility Margins are Volumetric. Almost 100% of Utility Costs are Fixed.

16. Safety Combustion zone safety Indoor ventilation Comfort Even temperatures throughout Correctly sized equipment Correctly designed ducts Sealed distribution system Affordability Controlled air leakage Reduced energy consumption. The Good Safety-Comfort-Affordability

17. The Bad Safety > Building Codes Comfort > Builder (HVAC Contractor) Affordability > Utility

18. The Ugly Can’t be Fixed Owner’s Problem Legal Actions