1. Addressing Market Transformation Lag Jennifer Anziano Regional Technical Forum May 15, 2015

2. Overview Today, we are looking to start a conversation around market transformation lag and what role (if any) the RTF has in developing measures to address this challenge. 2

3. Starting from What we Know: RTF develops regional energy savings estimates Many estimates rely on current practice baselines – Representing a mix of typical consumer purchases As consumers start to purchase more efficient products, the baseline efficiency increases Increasing the baseline (without increasing the efficiency of the efficient case) reduces the regional savings estimates While outside of the RTFs scope, this can impact a programs willingness to pay for a measure 3

4. Where Market Transformation Lag Comes into Play As efficiency programs in cities like Seattle and Portland transform the market, it dominates the regional baseline … meanwhile, rural areas are not “transformed” and often are just starting to gather steam 4

5. Another Example of Market Transformation Lag April 2015, the Federal standard for residential water heaters changed: – Large water heaters must be heat pump water heaters – Small water heaters do not need to be HPWHs, but there are minimal efficiency opportunities for electric resistance water heaters above the standard As a result, the RTF deactivated its measure for residential electric resistance tank water heaters But, this is a manufacturing standard and many electric resistance water heaters remain available… 5 … particularly in small rural communities

6. This Raised Policy Questions Discussion at the March RTF meeting and April Small Rural Subcommittee call raised policy questions: In both examples, the RTF is fillings its appropriate role of developing reliable savings estimate for the region BUT, is there also a role to support the small rural utilities in addressing market transformation lag? – Should the RTF develop specific savings estimates for small/rural utilities to account for market transformation lag? – Should (and if so, how) the RTF set clear restrictions for applicability of these measures, or does this put the RTF into an unwanted regulatory role? 6