1. Experience you can trust. 2004-2005 Statewide Multifamily Rebate Program: Findings & Recommendations CALMAC Meeting Pacific Energy Center October 17, 2007 Kathleen Gaffney, KEMA Inc.

2. 2 2004-2005 Program Background  Operated in PG&E, SCE, SCG, SDG&E.  Property owners/managers with existing MF properties of 5 or more units were eligible.  Eligible EE measures included: – Tenant unit measures (CFLs, other EE lighting, fixtures, p-stats, clothes washers, dishwashers, etc.). – Common area measures (interior/exterior EE lighting, exit signs, high performance windows, etc.). – High efficiency heating/cooling equipment (central boilers/WHs).  Program primarily delivered by installation contractors who seek out eligible properties.

3. 3 Barriers to Multifamily EE Implementation  MF Property Managers/Owners – Have little incentive to invest in EE because most benefits would accrue to tenants (split incentive). – Difficulty identifying EE opportunities. – Lack of capital. – Lack of maintenance staff to install EE measures. – Lack of time to focus on EE options. – Tenant turnover. – Turnover in management & maintenance staff.

4. 4 Program Successes  Program’s claimed electric savings greatly exceeded goals. – 104 mill. kWh claimed vs. 55 mill. kWh goal. – 17,535 kW claimed vs. 9,565 kW goal.  Program’s claimed gas savings (4.2 million therms) close to goal (4.4 million therms).  Relatively inexpensive to run. – Able to reach/exceed goals despite small marketing budgets and relatively few utility program staff. – Turnkey program: Introduce rebates and installation contractors run with them.  Property managers received EE measures with little or no out-of-pocket costs.

5. 5 Program Concerns  Large proportion of savings in few measures. – CFLs (62%) and p-stats (26%) of claimed kWh. – P-stats (55%) and boiler controls (34%) of therms.  Participating installation contractors favored quick, easy, and cheap measures. – Likely due to both property manager preference and lower contractor skill level.  Rebate funds would run out quickly. – Last only a few months for some IOUs.  Large property management firms not participating.  Contractors often avoided smaller MF properties.  Quality control concerns for products/installations.

6. 6 Evaluation Methods  Impact Evaluation – Focused on CFLs, p-stats and boiler controls which accounted for ~90% of program savings. – On-site surveys for CFLs & p-stats. – Billing analysis for boiler controls.  Process Evaluation & Market Assessment – Phone surveys of participating & nonparticipating MF property managers/owners. – Phone surveys of participating and nonparticipating contractors.

7. 7 Impact Evaluation Findings  Evaluated gross savings much lower than claimed. – Evaluated kWh 35% of reported. – Evaluated therms 15% of reported.  Main reasons for lower evaluated gross savings: – Estimated CFL operating hours (3.5/day) were reduced to (2.3/day) based on new research. – Tenants were not using p-stats in ways that would save energy. P-stats dropped in CA in 2006. – Boiler control savings overestimated for many reasons.  NTG ratios: CFLs 76%, p-stats 88%, boiler controls 80%.

8. 8 Impact Evaluation Findings  Billing analysis found much lower savings for boiler controls than ex ante assumptions. – Gross realization rates of 12-17%.  Analysis found potential problem areas: – Overestimating # of boilers used for space heating.  Many just used for water heating. – Base case assumption of no boiler controls.  Evidence that boiler controls may replace existing ones 30% of time. – Other problems.  Inconsistent monitoring of boiler controls.  Missing data on # of units in apartment building.

9. 9 Process Evaluation Findings  High levels of participant & contractor satisfaction.  Efforts to reach smaller MF properties started to pay off over time.  But recruiting larger property management firms remained a challenge.  Successful efforts to reduce participant complaints about low quality products & installations.  Mixed evidence whether program efforts to recruit “self initiator” property managers would pay off. – No evidence they were more likely than contractor- recruited managers to have diverse measures. – Some evidence they more likely to have plans for future EE projects.

10. 10 Conclusions  Program design is well suited to market barriers. – Biggest barriers were inability to I.D. EE opportunities, financial barriers, lack of staff to do installations. – Installation contractors, rebates solve these problems. – Surprisingly split incentive was minor barrier.  EE measures for tenant units more popular than for common areas even when tenants pay own energy bills.  New lights/p-stats seen as property improvements.  Reliance on current pool of dedicated installation contractors is double-edged sword. – Low-cost, turnkey installation is attractive. – But potential lighting/HVAC savings are missed due to lack of higher skill contractors.

11. 11 Recommendations  Try to recruit higher-skill lighting & boiler contractors. – Over time low-hanging EE opportunities will diminish.  Increase rebates and promotion for EE lighting fixtures. – Higher installation costs require greater subsidy. – Greater savings potential than lamps.  Use more up-to-date energy savings assumptions when estimating program impacts.  Continue efforts to educate, recruit more self-reliant property managers.  Continue quality control efforts.

12. Experience you can trust. Questions? Contact: Chris Dyson christopher.dyson@kema.com or Kathleen Gaffney kathleen.gaffney@kema.com