1. 1 HVAC System Efficiency Upgrade Cost to Consumers RTF Current Estimates Compared to Estimates Provided by Mark Jerome Pacific Air Comfort February 20, 2007 Updated - May 22, 2007 to Include GSHP Cost Estimates

2. 2 Gas Forced Air Furnace System Cost Comparison

3. 3 Gas Forced Air Furnace System Incremental Cost Comparison

4. 4 Air Source Heat Pump System Cost Comparison – HSPF 7.7/SEER 13

5. 5 Air Source Heat Pump System Cost Comparison – HSPF 8.5/SEER 13

6. 6 Air Source Heat Pump System Cost Comparison – Incremental Cost of HSPF 8.5/SEER 13

7. 7 Geothermal Heat Pump Cost and Savings Update – Why Now? Revised federal air source heat pump standards reduced incremental cost and savings from upgrades to Energy Star GSHPs Recent GSHP installed cost data significantly higher than current RTF assumptions Revised estimates of “minimum code” air source heat pumps increase incremental cost difference

8. 8 Geothermal Heat Pump Cost: Sample of OTEC Program Participants UnitCostCOPEERCapacity (Tons) 1$10,7933.315.93.0 2$19,4123.818.86.0 3$19,1624.022.24.0 4$17,0003.718.53.5 5$10,2603.314.95.0 6$12,5003.112.65.0 Average$14,8553.517.24.4

9. 9 Geothermal Heat Pump Cost: Sample of OTEC Program Participants UnitCostNotes 1$10,793 Customer did own trenching and backfilling 2$19,412 New furnace and ductwork; 6 trenches 150’ each with header main line) 3$19,162 New construction, includes ductwork of 22 runs and two returns) The ground was very rocky and took more labor for digging. 4$17,000 All done by contractor 5$10,260 Customer did own trenching and backfilling 6$12,500 Customer did own trenching and backfilling Average$14,855 All Systems

10. 10 Geothermal Heat Pump Cost: Source Mark Jerome, Pacific Air Comfort Installed CostLowMidHigh GSHP Cost$7,500$9,000$10,500 Loop$5,000$8,000$12,000 Commissioning & Other$1,000 Baseline Air Source HP$2,400$3,300$4,400 GSHP Incremental Cost$11,100$14,700$19,100

11. 11 Geothermal Heat Pump Cost/Ton Existing RTF vs. Alternative Cost Estimates

12. 12 Recommendations 1.Update GSHP Cost Estimates 2.Use Total Resource Cost (Include customer trenching and backfilling cost) –Best estimate of TRC M. Jerome’s Mid-Point Estimate of Installed Cost 3-Ton Unit x $4900/ton = $14,700 Agrees with OTEC “Contractor Installed” Cost ($4,857/ton) Agrees with “Average Cost” of all OTEC systems ($14,855) 3.Revise Air Source Heat Pump Installed Cost Estimate Use M. Jerome’s Mid-Point Estimate (HSPF 7.7/SEER 13) 3-Ton Unit * $1100/ton = $3,300

13. 13 Impact on GSHP of Recommendation on Cost-effectiveness of GSHP Reduces the number of cost-effective GSHP applications by 94% –67 applications under current incremental cost assumptions –4 applications under revised incremental cost assumptions Issue: Should RTF establish “niche” application screen to preserve GSHP measure as options where it is likely to be cost- effective? –Establish minimum house size for new construction –Establish minimum use “pre-upgrade” for retrofits –Limit use to projected savings cost less than $1.30/kWh first year savings (breakeven point for TRC cost-effectiveness in 2006$)