AGA Natural Gas Efficiency Programs Report - 2010 Program Year - FINAL - DeC 2011

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Natural Gas EfficiencyPrograms Report

2010 Program Year

Copyright 2011 American Gas AssociationAll Rights Reserved

Prepared by: Policy Analysis Group American Gas Association400 N. Capitol St., NWWashington, DC 20001www.aga.org

Contact:

Mariam Arnaout, [email protected]

December 2011



Copyright & Distribution: Copyright © 2011 American Gas Association. All rights reserved. This work may not be reproduced ortransmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by information storage and

retrieval system without permission in writing from the American Gas Association.

Notice: In issuing and making this publication available, AGA is not undertaking to render professional or other services for or on behalfof any person or entity. Nor is AGA undertaking to perform any duty owed by any person or entity to someone else. Anyone using thisdocument should rely on his or her own independent judgment or as appropriate seek the advice of a competent professional indetermining the exercise of reasonable care in any given circumstance. The statements in this publication are for general informationand represent an unaudited compilation of statistical information that could contain coding or processing errors. AGA makes nowarranties—express or implied—or representations about the accuracy of the information in the publication or its appropriateness forany given purpose or situation.

This publication shall not be construed as including advice, guidance, or recommendations to take or not to take, any actions ordecisions in relation to any matter, including without limitation relating to investments or the purchase or sale of any securities, shares orother assets of any kind. Should you take any such action or decisions, you do so at your own risk.

Information on the topics covered by this publication may be available from other sources, which the user may wish to consult foradditional views or information not covered by this publication.



CONTENTS INTRODUCTION...........................................................................................................................................

EXECUTIVE SUMMARY ................................................................................................................................

METHODOLOGY AND SURVEY SAMPLE ........................................................................................................

I. NATURAL GAS EFFICIENCY PROGRAM CHARACTERISTICS.........................................................................

Program Characteristics and Structure ...................................................................................................................

Objectives ...............................................................................................................................................................

Customer Segments and Participants .....................................................................................................................

Low Income Programs ............................................................................................................................................

Energy Efficiency

Activities

and

Products

...............................................................................................................

Customer Incentives ................................................................................................................................................

Efficiency Loans.......................................................................................................................................................

Natural Gas Efficiency Program Expenditures and Funding ...................................................................................

Natural Gas Efficiency Program Savings Impacts ...................................................................................................

II. NATURAL GAS EFFICIENCY PROGRAM FUNDING AND IMPACTS.................................................................

Natural Gas

Efficiency

Program

Expenditures

and

Funding

...................................................................................

Natural Gas Efficiency Program Savings Impacts ...................................................................................................

III. NATURAL GAS EFFICIENCY PROGRAM PLANNING AND EVALUATION .......................................................

IV. NATURAL GAS EFFICIENCY REGULATORY REQUIREMENTS AND COST RECOVERY TREATMENT................

Potential Studies .....................................................................................................................................................

Natural Gas Efficiency Program Requirements and Policy Goals ...........................................................................

Rate Structures and Regulatory Treatment Aligned with Utility and Energy Efficiency Goals ..............................

Recovery of Energy Efficiency Costs ........................................................................................................................

Direct Program Cost Recovery ................................................................................................................................

Lost Margin Recovery .............................................................................................................................................

Utility Performance‐Based Incentives .....................................................................................................................

Low Income Program Requirements .......................................................................................................................



Fuel Switching Allowances ......................................................................................................................................

Green House Gas or Carbon Emissions Targets and Credits ...................................................................................

V. THOUGHTS AND COMMENTS...................................................................................................................

DELIVERY BARRIERS AND LESSONS LEARNED ....................................................................................................................

MARKET PENETRATION ................................................................................................................................................

MOST SUCCESSFUL ATTRIBUTES ....................................................................................................................................

MOST INNOVATIVE FEATURES .......................................................................................................................................

APPENDIX A – STATE ENERGY EFFICIENCY PROGRAM PROVISIONS AND PRACTICES ....................................................................

APPENDIX B – NATURAL GAS EFFICIENCY PROGRAM 2010 EXPENDITURES AND 2011 BUDGETS BY STATE ...................................

APPENDIX C – NATURAL GAS EFFICIENCY PROGRAM 2010 EXPENDITURES AND 2011 BUDGETS BY REGION .................................

APPENDIX D – NATURAL GAS EFFICIENCY PROGRAM SAVINGS IMPACTS BY REGION ...................................................................

APPENDIX E – SURVEY PARTICIPANT COMPANIES ..................................................................................................................



Natural Gas Efficiency Programs Report – 2010 Program Year, Page 1 of 67

INTRODUCTION

Awareness of the energy economy has steadily grown beyond the purview of business and publicpolicy. Economic and environmental concerns have become increasingly important drivers ofconsumer decisions about energy. With this has come heightened attention to the potential forenergy efficiency to moderate consumer cost increases, reduce greenhouse gas emissions and

enhance energy security. For natural gas utilities, investing in natural gas efficiency programspresents an opportunity to achieve these objectives and benefit the communities they serve. Manyhave long-performing natural gas efficiency programs, while others are working with theirregulators to pave the way for new programs that will accelerate progress towards realizing a cleanenergy future while building sustainable value for utilities and their customers.

The AGA Natural Gas Efficiency Programs Report - 2010 Program Year presents data collectedfrom members of the American Gas Association and the Consortium for Energy Efficiency onratepayer-funded natural gas efficiency and conservation programs.1 The report aims to portraythe extent of this rapidly growing market in the United States and Canada and to identify practicesand trends in program planning, funding, administration and evaluation.

This fifth annual study looks retrospectively at the status of the natural gas efficiency market in2010, including expenditures and savings impacts, and presents a snapshot of budgets for 2011.Also explored are regulatory approaches to advancing the natural gas efficiency market. Thefindings illustrate how natural gas utilities have worked with their customers to help them reducetheir carbon footprint and increase cost savings and with regulators to bring about progressivepolicies that support such initiatives.

An important contributor to this data gathering project is the Consortium for Energy Efficiency(CEE). The data collection effort has expanded significantly since AGA and CEE begancoordinating the collection of efficiency data in 2009. By joining forces, AGA and CEE havereduced the reporting burden for respondents, eliminated duplicative efforts for our organizations,and significantly enlarged the sample pool—extending the survey to more utilities in the U.S. and

Canada and to third-party administrators of ratepayer-funded efficiency programs.

AGA would like to thank the members of AGA and CEE in the U.S. and Canada for participating inthis important data-collection effort. We appreciate tremendously the time and effort given by allsurvey respondents throughout the data collection process, including extensive clarification anddata validation follow up. (See Appendix E for a listing of participating companies).

1The Consortium for Energy Efficiency (www.cee.org) is a nonprofit public benefits corporation that develops initiatives for its NorthAmerican members to promote the manufacture and purchase of energy-efficient products and services. CEE members include utilities,statewide and regional market transformation administrators, environmental groups, research organizations and state energy offices inthe U.S. and Canada.




EXECUTIVE SUMMARY

In 2011 the American Gas Association (AGA) and the Consortium for Energy Efficiency (CEE)surveyed their U.S. and Canadian members and other efficiency program administrators on thestatus of their 2010 ratepayer-funded natural gas efficiency programs, including low-incomeweatherization. Based on survey findings for the 2010 program year:

• Natural gas utilities continue to help their customers to reduce energy usage and lower theirannual energy bills by investing in successful and innovative efficiency programs—whichinclude cash rebates and financial incentives, low-income specific programs, strategicpartnerships, joint programs with other electric and gas utilities, efficiency loans, educationcampaigns, targeted marketing, energy audits, whole house projects, and customizedretrofits of large facilities.

• Natural gas utilities fund 133 natural gas efficiency programs—127 in 40 states and six inCanada. U.S. utilities plan to launch two new programs in 2011.

• Residential natural gas efficiency program participants in the U.S. saved on average ten

percent of usage or about 76 Therm per year, averaging $62 in cost saving on their annualenergy bill.

• In the United States, utilities invested nearly $838 million in efficiency programs in 2010.They also budgeted nearly $1.2 billion for the 2011 program year (which represents agrowth of 42 percent compared to 2010 spending levels).2

• In North America (U.S. and Canada), natural gas efficiency program expendituresapproached $914 million in 2010. Program budgets are set at nearly $1.3 billion for the2011 program year (projecting a 42 percent increase in spending).

• U.S. spending on evaluation, measurement and verification activities reached $9.4 million in

2010, and it is estimated to approach $27 million in 2011 (a 182 percent increase).

• On a revenue basis, median spending for utilities on efficiency programs was 1.2 percent ofnet natural gas distribution revenues (net of gas costs) in 2010—ranging from less than 0.1percent to nearly 14 percent of net revenues.

• In 2010 U.S. customers saved nearly 81 trillion Btu through natural gas efficiency programs(a 53 percent increase from the 53 trillion Btu achieved in 2009), thus offsetting 4.2 millionmetric tons of carbon dioxide (CO2) emissions.

• In North America (U.S. and Canada), natural gas savings impacts from efficiency programsreached nearly 135 trillion Btu in 2010—the equivalence of 7 million metric tons of avoided

CO2 emissions (a 45 percent increase from the 90 trillion Btu achieved in 2009).

• Eighty-one percent of rate-payer funded programs provide natural gas efficiency programsto low income customers, and 73 percent of all programs provide low- or no-costweatherization assistance.

2The survey samples for 2010 expenditures and 2011 budget are similar but not identical.




• Twenty-eight states require utilities to fund natural gas efficiency programs, and 29 statesmandate that they implement weatherization and/or energy efficiency programs specificallyfor low-income customers.

• Thirty-nine states permit utilities to recover natural gas efficiency program costs, 30 allowthem to recoup lost margins related to program implementation, and 15 approve financial

incentives to reward efficiency program implementation or performance.

• Recovery of natural gas efficiency direct program costs are allowed via the followingmechanisms:

special tariff or rider in 27 states

base rates in 20 states

system benefits surcharge in eleven states

other mechanisms in seven states

•

Sixteen percent of regulator-approved natural gas efficiency programs permit fuel switching,and about eight percent measure efficiency from the energy source to the usage site byapplying a full fuel cycle analysis.




METHODOLOGY AND SURVEY SAMPLE

In 2011 the American Gas Association (AGA) and the Consortium for Energy Efficiency (CEE)surveyed their U.S. and Canadian members and other efficiency program administrators on thestatus of their 2010 ratepayer funded natural gas efficiency programs, including low-incomeweatherization.3 This includes non-utility or “third-party” administrators of ratepayer funded natural

gas efficiency programs.4 In this report, the term “natural gas efficiency program” refers to a set ofactivities designed to promote a cost-effective and prudent approach to energy usage , includinglow-income single and multifamily residence weatherization, indirect impact activities (e.g.,conservation education, contractor certification), and direct impact activities in new and existingbuildings and homes (e.g., equipment replacement, Energy Star Homes; a more detaileddescription of such activities begins on page 16).

The sample frame consists of all member organizations of AGA and CEE and nonmemberorganizations identified as large program administrators. The response rate from natural gasefficiency program administrators was 95 percent. Therefore, natural gas efficiency statistics maybe slightly understated in this report. Responses were received for 127 programs, implemented inthe U.S. in 2010 and six in Canada.

The survey asked respondents to describe their natural gas efficiency programs during the 2010calendar year (or coinciding program year for which data were available), which includedexpenditures and energy savings data for these programs. Also 2011 data were collected onefficiency program budgets and estimated participant counts.

Two variations of the survey were distributed: a short form was distributed to CEE utility membersand administrators of statewide energy programs, and a long form was distributed to all AGAmembers. The short form focuses mainly on natural gas efficiency program funding and savingsimpacts. The long questionnaire includes questions on program planning, structure, funding andsavings, evaluation, and regulatory treatment. The introductory part of this report and part IIencompass all collected data from short and long forms, and the remainder discusses responses

from the subset of companies that completed the long form (110 companies in the U.S. and threein Canada).

The utilities represented in this report have natural gas service territories in 40 states and Canada.They account for 78 percent of the natural gas delivered by gas distribution companies in theUnited States and have an aggregate annual U.S. throughput of 10.1 trillion cubic feet (Tcf).5 These companies serve nearly 51 million residential customers, corresponding to nearly 78percent of the U.S. residential natural gas market.

Not all reporting companies answered every question on the survey. Therefore the responsesample varies question to question. Because the sample pool is not normalized and varies year toyear, this report does not directly compare 2010 with prior year data, except for illustrative

purposes. Tables and charts generally represent a simple tally of the responses to the surveyquestionnaire.

Report footnotes and section introductions provide additional information regarding methodology.

3 Because a number of low-income weatherization programs are run by state agencies that did not participate in this survey, report datatend to understate low-income programs expenditures and budgets.

4Appendix E lists the companies represented in this report, including those that did not respond directly but whose data were providedby third-party administrators. While only national aggregates are presented in the report, Appendix B, C and D present expendituresand budgets data aggregated by state and region and energy savings data aggregated at the region level.

5Based on Energy Information Administration consumption data: Natural Gas Annual 2009 (Released December 28, 2010)




I. NATURAL GAS EFFICIENCY PROGRAM CHARACTERISTICS

According to 2010 program year data, there are at least 133 active natural gas efficiency programsin North America—127 in the U.S. and six in Canada—that are funded by local natural gas utilities.Two other programs are planned for launch in the U.S. in 2011 (see Figure 1).

Figure 1

Ratepayer-Funded Natural Gas Efficiency Programs in 2010(133 Active in 40 States & Canada and 2 Planned)

The 127 U.S. programs include 117 that are administered by utilities (in part or whole) and ten thatare implemented solely by a statewide energy efficiency program administrator, such as theEnergy Trust of Oregon, New Jersey Clean Energy Program, New York State Energy Researchand Development Authority, and Wisconsin Focus on Energy. Seventeen of the 117 utilities fundthird-party administered programs in conjunction with their own utility-implemented programs;however, to avoid double-counting, these are counted once in this report.




Program Characteristics and Structure

From this point forward (except for part II, which focuses on funding and savings data for all surveyrespondents), this report describes a subset of ratepayer-funded natural gas efficiency programsfor which a full set of qualitative data was obtained. This subset comprises 113 programs (110 inthe U.S. and three in Canada) funded by the ratepayers of 73 natural gas distributors, 38

combination gas-electric utilities and two municipally-owned utilities (see Table 1).

Table 1

NATURAL GAS EFFICIENCY PROGRAM IMPLEMENTATION BY UTILITY TYPE 113 PROGRAMS

COMPANY TYPE PROGRAMS PERCENTAGE Investor‐Owned Natural Gas Distributor 73 65%

Investor‐Owned Gas & Electric Utility 38 34%

Municipally‐Owned Utility 2 2%

The majority of natural gas efficiency programs (80 of 113) are implemented as natural gas-onlyprograms, while 33 are combined with electric efficiency programs (see Figure 2).

Figure 2

Gas Only (80)

Gas & Electric(33)

Natural Gas Efficiency Programs StructureTotal = 113 programs

Gas Ef f iciency Program Characteristics

71%29%




Many natural gas efficiency programs have been in place for many years, and they continue togrow. Generally programs range from newly launched programs to mature programs that span 20or more years (see Table 2). Forty percent of programs have been in place ten years or longer,and half of those have operated for at least 20 years. However, the other 60 percent wereimplemented within the last 10 years, and the median program age is four years. Nearly 22percent of programs were launched in 2009 and 2010.

Table 2

NATURAL GAS EFFICIENCY PROGRAMS SINCE INCEPTION 111 PROGRAMS

YEARS IN SERVICE NUMBER OF PROGRAMS

Less than 1 (2010 start) 8

1 ≥ < 10 59

10 ≥ < 20 22

20 or more 22

Forty-three percent of natural gas efficiency programs (48 of 111) expanded since the 2009program year. Utilities accomplished this by revising conservation improvement plans, settinghigher energy savings targets, accessing new markets and customer segments, increasing fundingand participation levels, and enhancing outreach (via marketing and conservation education).

Some initiated new rebate programs, while others boosted their existing incentives by increasingrebate levels and adding other qualifying equipment. Many added new programs such as qualityinstallation training, building operator certification, Energy Star New Home, school outreach, smallbusiness, and behavioral change programs (e.g., Energy Feedback Pilot, Neighborhood EnergySavings Outreach). Other examples of programs and products that were added by surveyrespondents during 2010 are appliance retention and replacement programs, home energy audits,insulation and air sealing, gas fireplace electronic ignitions, direct install, commercial boiler tune-up, Deep Energy Retrofit, prescriptive and custom programs, C & I thermostats, business energycalculator, standard commercial kitchens, agricultural, and lodging.

A diverse group of parties administers natural gas efficiency programs: 66 percent (73 of 111) areadministered by the utility alone, six percent by a nonprofit organization, three percent by agovernment agency, and one percent by another type of entity (e.g., a private contractor).




Another 21 percent are managed by a utility working with other groups, and four percent are run bytwo or more non-utility entities (see Table 3).

Table 3

NATURAL GAS EFFICIENCY PROGRAMS ADMINISTRATION 111 PROGRAMS

PROGRAMS PERCENTAGE

Utility‐Administered 73 66%

Nonprofit Organization 7 6%

Government Agency 3 3%

Other Entity 1 1%

Utility Working with Other Entities 23 21%

Two or More Non‐Utility Entities 4 4%

Among the other parties cited as working with the utility are statewide program administrators,private program management contractors, conservation consultants, electric utilities, universityoutreach groups, government agencies, and community action agencies that deliver low-incomeprograms.

When the utility is the administrator, non-evaluation program functions are carried out by in-housestaff in 57 percent of programs (56 of 97 programs) and by a third party in nearly 12 percent (or 12programs). In in-house staff collaborate with a third party in the other 30 percent (or 29 programs).(The Program Planning and Evaluation section discusses assignment of evaluation functions).

In many utility-administered programs, full-time staff is assigned to energy efficiency roles, while inother programs employees charge only a portion of their time towards energy efficiency functions.For example, instead of efficiency-specialized full-time employees, marketing and rates staff mightundertake efficiency-related tasks as needed. A mix of the two setups is also common.

A calculation of full-time equivalent (or FTE) staff represents the combined hours used for energyefficiency projects, divided by the number of hours in a standard work day for a given programyear. Based on 88 responses, the number of internal FTE staff involved in energy efficiencyprojects ranges from 0.25 to 132 employees; however, the median number of FTE is two. Table 4groups programs into FTE size groups and shows the number and percentage of programs thatfalls within each FTE category.




As shown in Table 4, 71 percent of natural gas efficiency programs have fewer than five full-timestaff equivalents, and only five percent of programs fall within the 50 or more FTE category.

Table 4

UTILITY‐ADMINISTERED NATURAL GAS EFFICIENCY PROGRAM STAFF 88 PROGRAMS

FULL TIME EQUIVALENT STAFF PROGRAMS PERCENTAGE

One or Less 23 26%

1 > < 5 40 45%

5 ≥ < 10 10 11%

10 ≥ < 25 7 8%

25 ≥ < 50 4 5%

50 or more 4 5%

Fifty-three of 111 respondents (48 percent) either coordinate or jointly administer programs withother utilities and organizations. More than half of the 53 respondents work with electric, gas orcombination utilities to achieve consistent program offerings and delivery and reduceimplementation costs, thereby increasing benefits to customers. These utility collaborations maytake the form of common program implementation (either throughout the state or among a subsetof utilities), or they may on the other hand involve a distribution of functions between the parties(with each entity responsible for different programs or administrative functions). Utilities that areinvolved in common implementation often share the planning, marketing, web pages, hiredconsultants, evaluation, and reporting components of their programs.

In other jurisdictions, gas and electric utilities coordinate specific efficiency measures or fundspecific programs that benefit their mutual customers. Still others have agreements to addressboth fuels during an energy audit. Other examples of utility partnering are cost sharing, referralexchanges between gas and electric utilities, uniform rebates, data sharing on efficiencymeasures, and sponsorships of energy efficiency outreach events. In one example, the gas utilityshares rebate incentives for high efficiency furnaces with an electric commutated motor (ECM) andclaims the resulting lighting savings in electric municipal territories. In some cases utilitypartnerships are required by the state; however, in others they are voluntary.

Utilities also work with nonprofits, community action agencies, conservation consultants, third-partyvendors, and city, county and state agencies. They either coordinate low income weatherizationactivities with community action agencies or reimburse these agencies for incentives and/oradministrative costs. Also some of the utilities that fund statewide energy efficiency programleverage these programs by offering free home energy audits and enhanced rebates to participantsin the statewide program. Others present their customers with the option to select betweenstatewide program rebates or utility financing.




Trade allies form another vital partner to the utility in raising customer awareness and deliveringefficiency products and services. Many program managers recognize the necessity to engage,incentivize and train trade allies in transforming the market. Seventy-nine percent of respondents(87 of 110) indicated that they partner with one or more parties in the market supply chain duringthe 2010 program year. Of the 87 programs, 99 percent partner with contractors, 67 percent withretailers, 56 percent with equipment distributors, and 33 percent with manufacturers (see Table 5).

Table 5

NATURAL GAS EFFICIENCY PARTNERSHIPS WITH TRADE ALLIES 87 PROGRAMS

TRADE PARTNER NUMBER OF PROGRAMS PERCENTAGE

Manufacturers 29 33%

Equipment Distributors 49 56%

Retailers 58 67%

Contractors 86 99%

Other 9 10%

While 22 percent of respondents have partnered only with contractors, the rest have relationshipswith more than one supply chain partner. In fact, 24 percent are involved with all four trade allies.Also ten percent engage other market players, such as builders and developers.

Relationships with trade partners vary from casual arrangements to formal networks of contractors,

authorized dealers, and trade ally focus groups. Utilities provide members of their trade allynetworks with efficiency education, program-specific information (e.g., efficiency rebates,application process), and marketing materials (e.g., displays, brochures, mailers, in-storeadvertising, and tear sheets). They also offer cooperative advertising and co-branded materials,technical training, training incentives or subsidies, website listings, equipment sales incentives orbonuses, ongoing technical and sales support, newsletters, and/or contractor certification.

Some utility efficiency programs have dedicated trade relations managers who engage in directoutreach to trade representatives and maintain relationships via continued sales and technicalsupport. Other trade partner outreach includes seminars, presentations at trade group meetings,and marketing at trade shows. A few programs have introduced novel arrangements with the tradecommunity to encourage customers, which include instant rebates through the contractor or at the

point of purchase and free customer savings cards that give access to discounts on efficientproducts and services at participating local retailers.

By working with efficiency program administrators, the retailers and dealers benefit from increasedsales through enhanced marketing and lowered up-front cost for the customer. Generally therelationship between efficiency programs and trade partners presents mutual promotionalopportunities. Trade allies inform customers about efficiency program incentives, and in turn manyefficiency programs provide customer referrals to these market partners. Commercial technologiesare also marketed via trade allies. Basically, program administrators are able to target a widermarket segment via trade allies, and are able to have an influence on the types of energy efficiencyproducts that are made available to energy consumers.




Objectives

When asked to select all goals that drive their natural gas efficiency programs, respondentsanswered as follows: 107 of 111 target direct impact on energy savings, 87 engage in behavioralchange (via education, training or direct outreach to customers and others), 65 seek markettransformation (through manufacturers, distributors, retailers and consumers of energy-related

products and service), and 41 aim for avoided emissions. Thirty percent (33 of 111) set all fourgoals for their programs (see Table 6).

Table 6

PURPOSE OR GOAL OF NATURAL GAS EFFICIENCY PROGRAM

111 programs with one or more goals

GOAL NUMBER OF PROGRAMS PERCENTAGE

Direct Impact on Energy Savings 107 96%

Behavior Change 87 78%

Market Transformation 65 59%

Direct Impact on Avoided Emissions 41 37%

Other 13 12%

Thirteen respondents cited different or supplemental goals as follows: cost-effectiveness, jobcreation and economic development, assistance to low-income customers via weatherization

services, reduction of low-income customers’ energy bills and payment arrears, minimizing utilityuncollectible expenses, mitigating growth in electricity consumption and dependence on otherfuels, and reducing peak and off-peak electric generation needs thus mitigating transmissioninfrastructure investments.

Customer Segments and Participants

Respondents were asked to identify all customer segments in their efficiency programs. Eighty-nine percent (96 of 108) have residential efficiency programs, 74 percent have low-income, 69percent have commercial/industrial (C & I), and nine percent have separate industrial programs.While 53 percent of programs include all customer segments, ten of 108 have only residential,

eleven only low-income, and one has only a C & I program (see Table 7).

Participant counts were obtained for 101 active natural gas efficiency programs in 2010, andestimated participant counts were gathered for 95 programs in 2011. Not all programs track orreport participation rates or the number of enrollments. In cases where respondents do notactively monitor participants, they provided estimates. Others track the number of paid rebates orgrants instead of participating customers. Still others differ on whether to count online audits,behavioral conservation program reports, home savings evaluations, or students participating inschool-based education programs. The numbers in Table 7 reflect these discrepancies and thusparticipant figures should be considered as very rough estimates.




During 2010, enrollments in natural gas efficiency programs reached more than 2.4 million residential customers, 431 thousand low-income participants, and 148 thousand C & I customers.Nearly two thousand customers were enrolled in separate industrial programs. In a few cases,programs had low to no participation in 2010 due to late program implementation. Table 7 showsparticipant counts for 2010 and estimates for 2011.

Table 7

PROGRAM PARTICIPANTS BY CUSTOMER SEGMENT

RESIDENTIAL 96 PROGRAMS

LOW INCOME 80 PROGRAMS

C & I 75 PROGRAMS

SEPARATE INDUSTRIAL10 PROGRAMS

2010 PROGRAM YEAR 2,413,153 430,913 148,127 1,931

2011 (ESTIMATED) 2,363,547 309,517 176,663 3,948

Participants per program vary widely. During the 2010 program year, the median participant countfor residential programs was 3,862, ranging from as few as 53 to as many as 455,672 customers.In low-income programs, with a range of three to 133,329 participant customers, the median countwas 249. C & I programs had from one to 84,870 accounts, and the median participant count was144, while separate industrial programs enrolled from nine to 241 participants, with a median of110 participants.

Low Income Programs

As mentioned earlier, 74 percent of natural gas efficiency programs provide conservation or energyefficiency activities to low-income customers—other than education, counseling and online tools.When asked whether they had income-specific efficiency programs, 71 percent of respondents (79of 111) indicated that they had a set of efficiency programs exclusively available to their low andlimited-income customers. These income-qualified programs are administered by the utility in 32percent of programs (or 25 of 79), a community action agency in 23 percent (18 programs), thestate in one program, and by a different entity in six percent (or five programs). A group of variedentities runs the remaining 38 percent (or 30 programs).

Some of these coordinated efforts involve joint delivery of gas and electric low-income efficiencyprograms. Others involve the utility working with community action agencies (CAA) to leverage

both the CAAs’ grassroots networks and federal weatherization funding, thereby providing a morecomprehensive set of measures and accessing a larger number customers in this hard-to-reachdistressed market segment. Additionally, several utilities that do not administer their own low-income efficiency activities support statewide energy efficiency low-income programs.

Income-specific efficiency programs generally present income-qualified renters and home ownerswith solutions that help them manage their energy usage and save on their monthly energy bills.Utilities gear their low income programs toward either or both single and multi-family housing, asretrofits or in new construction (examples of such programs include municipal housing retrofitprograms and new affordable housing programs).




Some programs offer low-cost measures to customers, based on income qualifications, either byfollowing federal poverty level guidelines or by using a lower poverty threshold to expand the poolof eligible customers. In some cases, additional incentives are offered to near low-incomecustomers (just above the federal standard). Many programs cover 100 percent of the incremental cost of converting to higher efficiency appliances, while others provide a fixed dollar amount perspecific measure, covering a significant portion of the equipment replacement cost. In a few

cases, a portion of health and human safety measures and/or repairs are also covered under thelow-income program.

Generally, traditional residential direct rebates are often inadequate to motivate customers atcertain poverty levels to implement home efficiency improvements; therefore, many low incomeprograms are offered at no cost to the household. Besides weatherization services (e.g., air andduct sealing, roof and floor insulation, appliance and pipe wrap), these no-cost programs mayinclude the replacement and installation of high efficiency natural gas furnaces, boilers,dishwashers, clothes washers, water heaters (storage or tankless), and/or cooking ranges. Alsoincluded in many no-cost programs are window replacements and programmable thermostats.

Energy Efficiency Activities and Products

Survey respondents were asked to identify all efficiency components they offered in each of fourcustomer segments. According to 111 responses, one or more efficiency activity is offered in 100programs to the residential single family segment, in 90 programs to the residential low incomesegment, in 82 program to the C & I segment, and in 79 programs to the residential multi-familysegment. Based on these responses, when taking into account indirect impact activities, 81percent of programs provide conservation and/or energy efficiency activities to low incomecustomers (see Table 8).

Table 8

UTILITY‐IMPLEMENTED NATURAL GAS EFFICIENCY PROGRAM ACTIVITIES BY CUSTOMER SEGMENT 111 reporting programs with one or more efficiency activity

ENERGY EFFICIENCY ACTIVITIES RESIDENTIAL

SINGLE FAMILY 100 PROGRAMS

RESIDENTIAL

MULTI‐FAMILY 79 PROGRAMS

RESIDENTIAL

LOW INCOME 90 PROGRAMS

C & I 82

PROGRAMS

Weatherizat ion 60 42 81

Indirect Impact Programs

Certification 18 14 18 8

Education 92 68 71 64

Online Tools 71 51 54 53

Technical Assessment 60 43 53 49

Training 43 33 34 42

Direct Impact Programs – Exist ing Buildings 83 62 76 70

Direct Impact Programs: New Construct ion/Expans ions 57 37 33 45

Other 8 4 5 2




Table 8 breaks down responses by customer segment and energy efficiency activity. Residentialsingle family efficiency programs enjoy the most comprehensive set of efficiency activities, followedby residential low income, commercial/industrial, and residential multi-family programs.

A look at specific efficiency activities shows that education outreach is most adopted across

segments, particularly in the residential single family and low income segments (83 percent and 64percent of these programs, respectively). Examples of such activities include school educationprograms, brochures, and bill inserts. Also widely prevalent are direct impact activities in existinghomes or buildings—in 75 percent of residential single family, 68 percent of low income, 63percent of C & I, and 56 percent of residential multi-family programs. These direct impact retrofittype activities include equipment replacement and upgrades (e.g., appliances, doors, windows,and thermostats), building retrofits, commercial food service, process equipment, energymanagement systems and custom process improvements.

Weatherization is another well-established activity in many programs, particularly in the low incomesegment (in 73 percent of these programs) and in residential single family segment (54 percent).These weatherization activities incorporate building shell insulation and air sealing (ducts and wall

cracks). Also commonly employed are web tools (e.g., online energy savings calculators) and on-site energy audits, which tend to be low cost relative to other program components.

Also standard in many programs are direct impact activities for new homes and buildings—used in51 percent of residential single family programs and 41 percent of C & I programs. Direct impactactivities encompass energy efficient homes, efficiency design assistance and industrial efficiency.

Efficiency training and certification (of contractors, installers and building operators) tend to lagbehind other program components. In residential applications, technical training is provided in 39percent of single family, 31 percent of low income, and 30 percent of multi-family programs. Thirty-eight percent of C & I programs provide energy efficiency training. Professional certification isoffered in 16 percent of residential single family and low income programs, 14 percent of multi-

family programs, and 7 percent of C & I programs.

A relatively small number of respondents selected “other” energy efficiency activities. In thiscategory, they included elementary school education with direct install kits, in-home energyconsultation with direct install, and behavioral feedback.

Energy Efficiency Products: Respondents were asked to identify all products (equipment andcomprehensive projects) included in their natural gas efficiency programs and to indicate whethertheir programs recognized different performance levels within a product category and as suchvaried incentive amount based on the equipment’s or overall project’s efficiency level. On thefollowing page, Table 9 depicts survey responses by program segment and product category.

Based on answers of 113 respondents, the most prevalent products in residential natural gasefficiency programs are furnaces (92 percent of programs overall), storage water heaters (76percent), boilers (73 percent) and tankless water heaters (59 percent). Similarly, in the commercialsegment, boilers are most offered (62 percent), followed by furnaces (61 percent), storage waterheaters (57 percent), and tankless water heaters (50 percent). Custom programs are mostcommon in separate industrial segment (in 36 percent of efficiency programs overall).

Other products listed by 28 respondents, include energy assessments, attic and wall insulation, airand duct sealing, renewable energy, programmable thermostats, ECM (electronically commutatedmotor) furnace fans, boiler rest controls, and drain water heat recovery units tied to gas hot waterheating systems.




Table 9

PRODUCTS INCLUDED IN NATURAL GAS EFFICIENCY PROGRAMS – 2011 113 PROGRAMS

PROGRAMS, PRODUCTS AND SERVICES

PROGRAMS OFFERING THIS

PRODUCT

PROGRAMS THAT MATCH LARGER INCENTIVES

WITH HIGHER EFFICIENCY PERFORMANCEPROGRAMS PERCENTAGE RESPONSES PROGRAMS PERCENTAGE

RESIDENTIAL SEGMENT

HVAC

Furnaces 104 92% 100 46 46%

Boilers 83 73% 79 33 42%

Quality Installation 36 32% 33 5 15%

Tune‐up/Controls Upgrade 46 41% 43 9 21%

Direct Heating Equipment 23 20% 22 10 45%

APPLIANCES

Dishwashers 10 9% 9 2 22%

Clothes Washers 20 18% 18 4 22%

WATER HEATERS

Storage 86 76% 82 31 38%

Tankless 67 59% 64 13 20%

Solar Thermal 9 8% 9 4 44%

WINDOWS Any Product 21 19% 19 1 5%

NEW CONSTRUCTION Whole Home 47 42% 44 29 66%

HOUSE RETROFIT Whole Home 55 49% 52 29 56%

OTHER 28 25% 28 1 4%

COMMERCIAL SEGMENT

ENERGY MANAGEMENT Any Product 36 35% 35 20 57%

HVAC

Furnaces 69 61% 66 44 67%

Boilers 70 62% 67 47 70%

Quality Installation 21 19% 20 5 25%

Gas‐Fired Packaged Unitary Equipment 31 27% 31 15 48%

Unit Heaters 45 40% 45 23 51%

Tune‐up/Controls Upgrade 52 46% 50 18 36%

APPLIANCES

Dishwashers 18 16% 18 7 39%

Clothes Washers 25 22% 25 8 32%

WATER HEATERS

Storage 64 57% 61 30 49%

Tankless 56 50% 54 20 37%

Solar Thermal 15 13% 15 9 60%

KITCHENS Any Product 47 42% 45 16 36%

NEW CONSTRUCTION Whole Building 38 34% 36 27 75%

RETROFIT Whole Building 39 35% 37 26 70%

SEPARATE INDUSTRIAL SEGMENT

PRESCRIPTIVE (ANY PRODUCT) 33 29% 33 19 58%

CONTINUOUS ENERGY IMPROVEMENT OR STRATEGIC ENERGY MGMT. 23 20% 23 12 52%

PLANT ASSESSMENTS 30 27% 28 12 43%

CUSTOM 39 36% 38 23 61%

OTHER 25 22% 24 4 17%




Additional residential products include chimney dampers, low-flow showerhead and faucet aeratorkits, clothes dryers, space conditioning, pipe wrap, combination space heat/water heating unitswith condensing tankless water heaters, and hearth products (e.g., high efficiency hearths,pilotless gas fireplaces, electronic ignition for qualifying gas fireplaces). Another specificresidential product is a new 90% AFUE furnaces in conjunction with duct sealing and BPI certifiedblower door and duct blaster testing.

Additional C & I products include chillers, steam traps, primary air dampers, vent dampers, low-flowpre-rinse sprayers, radiant hydronic heating systems paired with water heaters, retrocommissioning of gas building controls, engineering studies, modulating burners, combined heatand power, commercial retrofit programs (both custom and prescriptive measures), and buildingenergy benchmarking with shared costs for certification.

In terms of financial incentives, many programs follow a tiered approach to appliance or wholeproject efficiency, recognizing the varying efficiency performance levels within each productcategory. These programs therefore match financial incentives to the equipment’s efficiency ratingor the project’s overall efficiency performance, rather than having the same incentive for allequipment models or efficiency projects that reach a certain efficiency threshold.

In the residential category, tiered efficiency incentives are offered in 66 percent of new wholehome, 56 percent of whole home retrofit, and 46 percent of furnace programs. In the commercialsegment, stepped up incentives are offered in 75 percent of new whole building, 70 percent ofwhole building retrofit, 70 percent of boiler, and 67 percent of furnace programs. Table 9 showsthe number and percentage of programs in each segment and product category that enhanceincentives with increased product efficiency. The next section (Customer Incentives ), discussesfurther financial incentives and appliance rebates offered to customers to encourage efficiencyimprovements.

Customer Incentives

Incentives Funding: Natural gas efficiency programs offer customers financial incentives toencourage energy conservation and improved efficiency. These include appliance rebates,equipment or project financing, and in many cases free measures to low income customers.Respondents reported 2010 expenditures for customer incentives and 2011 budgets.

In North America, programs spent about $383 million on customer incentives of which $213 millionwere allocated for residential incentives, $51 million for low income, $93 million for commercial,$19 million for industrial, and $8 million for other incentives.6 In the United States, $203.8 million inincentive funds were used for residential programs, $48.8 million for low income, $84 million forcommercial, $11.5 million for industrial, and $7.9 million for other incentive programs—totaling to$356 overall.

6In this report, North America refers to Canada and the United States of America




Figure 3 shows the distribution of customer incentives funds in North America by market segmentfor the 2010 program year. As seen, residential programs were allotted more than 50 percent ofincentive funds.

Figure 3

Residential$212.6 million

Low Income

$51.2 million

Commercial$93.1 million

Industrial$18.6 million

Other $7.9 million

2010 Natural Gas Efficiency Incentives Program Expenditures by Sector 86 Residential, 53 Low Income, 66 Commercial and 8 Separate Industrial Programs

= $383.4 Million in North America

Gas Ef ficiency Program Chracteristics

55%

24%

13%

5%

2%

Efficiency incentive budgets for 2011 in North America include $282 million for residentialprograms, $66.9 million for low income, $140.3 million for commercial, $38.4 million for industrial,and $12.6 million for other incentives (a total of $540.3 million). United States 2011 incentivebudgets total $508.2 million, of which the $272.9 million are slated for residential programs, $61.4million for low income, $131.6 million for commercial, $29.8 million for industrial, and $12.6 millionfor other incentive programs. The "other category consists primarily of cross-segment financialincentives; however, a few respondents included funds for product development, markettransformation, energy audits and free programmable thermostats.

Some respondents were unable to separate industrial incentive dollars from commercial funds,while others combined commercial incentive dollars into the residential category. Therefore, abouteight percent of 2010 commercial expenditures and about nine percent of 2011 commercialbudgets, respectively, include industrial dollars. Less than one percent of residential incentivedollars (2010 and 2011) include commercial incentives.

Cash Rebates and Other Financial Incentives: Program administrators use these incentivefunds to provide customers with rebates on high-efficiency natural gas appliances, subsidize largerhome or building efficiency projects, or finance energy-efficient purchases. Eight-three percent ofnatural gas efficiency programs (92 of 111) offer customers in one or more segments cash rebatesor other financial rewards for energy efficiency improvements. Residential customers are offered




incentives in 81 percent of programs (90 of 111), low income customers in 28 percent, commercialin 63 percent, and industrial customers in 33 percent of programs. Seventeen percent (or 19programs) have financial incentives for all customer segments. As seen in Table 10, the incentivedollar amount varies widely depending on the type and number of measures and resulting energysavings.

Table 10

DOLLAR RANGES FOR GAS EFFICIENCY REBATES & INCENTIVE PROGRAMS

EFFICIENCY

MEASURES

RESIDENTIAL

(90 Programs)

LOW INCOME

(31 Programs)

COMMERCIAL

(70 Programs)

SEPARATE INDUSTR

(37 Programs)

PROGRAMS DOLLAR RANGE PROGRAMS DOLLAR RANGE PROGRAMS DOLLAR RANGE PROGRAMS DOLLAR R

Furnaces 77 $35 $1,000 27 $35 $4,500 57 $35 $25,000

Boilers 60 $35 $3,000 22 $35 $5,000 59 $35 $30,000

Dishwashers 8 $20 $100 5 $20 $100

Clothes Washers 21 $20 $100 8 $20 $100

Storage Water

Heaters66 $25 $550 24 $50 $1,400 53 $35 $25,000

Tankless Water

Heaters54 $120 $800 16 $500 $800 40 $350 $25,000

Whole Home or

Building Retrofits43 $40 $10,000 21 $250 $5,000 26 $ 100,000

New Whole Home

or Buildings13 $225 $8,000 15 $100 $8,000 20 $500 $ 100,000

Windows 16 $260 7 $25 14 $ 2,500

Programmable

Thermostats49 $10 $60 18 $25 $125 32 $25 $100

Food Service

Equipment40 $10 $25,000

Energy Mgmt.

Systems26 $30 $ 100,000 4 $

Custom Incentive

Programs34 $100 $3,600,000 5 $3,6

Other 26 $4 $16,000 4 $2 $1,600 13 $25 $15,000 1 $ 5

Across segments, incentive programs are most common for furnaces, storage water heaters,boilers, tankless water heaters and programmable thermostats. In terms of dollar savings,generally customers benefit more when they opt for a whole system efficiency project, becausethey tend to find most generous incentives in a holistic approach and because their energy bills willbe significantly lowered in the long run. In low income programs, the rebates tend to cover more, ifnot all, of the costs of new high efficiency appliances. Higher incentives are also prevalent in foodservice equipment, energy management systems, and custom commercial and industrialprograms. Besides direct rebates, program administrators have developed various financialincentives to meet the needs of their market.




Table 11 shows examples of other types of incentive arrangements for residential efficiencyimprovements.

Table 11

OTHER FINANCIAL INCENTIVE ARRANGEMENTS IN RESIDENTIAL EFFICIENCY PROGRAMS

Furnaces

• 50% to 80% of replacement cost

• 70% of incremental costs for multi‐family

• Enhanced rebates for 300 MBH (1,000 Btu/Hr) furnaces

• Incentives based on AFUE levels

Boilers


• 70% of incremental costs for multi‐family

• Enhanced rebates for 300 MBH (1,000 Btu/Hr) furnaces

• Incentives based on AFUE levels

Clothes Washers • Combination gas‐electric customers receive $50

Storage Water Heaters

• 50% to 80% of costs

• Higher rebates for conversions from electric to gas high efficiency storage water heater than from

a gas water heater

Tankless Water Heaters

• Higher rebates for conversions from electric to gas high efficiency tankless water heater than

from a gas water heater

• Indirect Water Heater: $300 per unit

Whole Home Retrofit

• Average value of project

• Direct Install

• Per square foot: $0.07 to $0.5 (attic, wall, floor insulation); $0.3/sq ft R‐19 or higher

• 1/3 to ½ of project costs, plus financing

• 50% to 100% of project cost

• 50% of cost up with a maximum of $1,000 or $1,250

• 70% up to $500 or up to $750

• 75% up to $750 for attics

• Sealing = 70% of installed cost up to $200

• $1,000 seal up incentive to complement statewide incentive, if customer accepts free home audit

New Whole Home

• Direct Install • Incremental cost

• Per Therm: $1.72 to $5.14

• Based on square foot

• 75% of cost capped at $4,000

• $450 for gas; $600 for gas and electric

• $500 to $1,000 for the builder

• $900 for Energy Star

Windows • Per square foot: $0.95 to $10 (normally $1 to $3 per sq ft)

• Per Window: $12.5 window

Programmable T‐Stats • 100% of cost

Other

• Air filters: $4 coupons

• Drain Water Heat Recovery: $150

•

Free

weatherization

kits

to

customers

that

completed

home

energy

audit

• Integrated Boiler‐Hot Water Unit: $300

• Low Flow Showerheads: $10; $6 to $7 for multi‐residential showerhead programs

• Seasonal Checkup: $50

• Each efficiency rebate requires an energy audit, programmable thermostat and weatherization kit

As seen in Table 10, 11 and 12, incentive reimbursements for residential and commercial/industrialprograms may consist of a set dollar amount per high-efficiency appliance unit or involve apercentage of total equipment replacement or project cost (often capped at a specific dollaramount). Other programs pay a specific dollar amount per square footage or unit of energy saved.In some programs, the reimbursement is a percentage of the incremental cost of acquiring the




higher efficiency product(s). In others, higher incentives are provided to larger volume customersthat chose to upgrade to a higher efficiency level.

Other measures that qualify for rebates in residential programs are dryers, infrared heating, indirectwater heaters, combined products such space heating system and water heater, integrated boilerand water heater units, water heater wrap, drain water heat recovery units tied to gas hot water

heating systems air filter coupons, low-flow showerheads, heating system check service, hearthproducts (fireplaces, pilotless hearth, duct and air sealing, wall and attic insulation), LivingWiseconservation and efficiency school education program and energy savings kits, free weatherizationkits upon completed Energy Audit, and free thermostats.

In low income programs, incentives also cover combination space heat and water heater units anddrain water heat recovery units. Several pay the full cost of high-efficiency measures, includingappliance repairs and replacements. In other low-income programs, the utility pays up to 90percent of the total installation costs, capped at a specific dollar limit. Still others include the fullappliance replacement cost only if it can be justified by the energy savings, health and safetycriteria or pass a Total Resource Cost test.

Other measures that qualify for rebates in C & I programs include continuous modulating burners,modulating boiler controls, reset control, low-flow sprayer, ECM motors, refrigerators, aerators,low-flow showerheads, gas furnace and boiler tune-ups, vent damper, primary air dampers, steamtrap service, free spray valves, insulation (roof, wall, floor), opaque shell insulation and air sealingleakage, multifamily residential showerhead program, drain water heat recovery units tied to gashot water heating systems, dryers, integrated condensing boiler and water heater, gas cooling,combined heat and power, infrared heat, and solar heating. Many of the C & I programs arecustom-analysis based, and financial incentives are awarded on a site-specific basis. Table 12shows examples of other types of incentives arrangements for C & I efficiency improvements.

Table 12

OTHER FINANCIAL INCENTIVE ARRANGEMENTS IN COMMERCIAL/INDUSTRIAL EFFICIENCY PROGRAMS

Furnaces

• $1.75/Mbtu

• $2 to $3 per kBtu/hr

• 30% to 80% of cost

• Up to 40% of cost

Boilers

• Per kBtu/hr: $1 to $4

• Per MBtu/hr: $1 to $4

• Per MMBtu: $1,400 to $2,000


• 25% of cost up to $5,000


• Up to 50% of incremental cost

Storage Water Heaters

• Per kBtu/hr: $0.5 to $2.5




• $35 if less than 80 rating; $150 if greater than 80

Tankless Water Heaters

• Per kBtu/hr: $1.5 to $2






Table 12 (continued)

OTHER FINANCIAL INCENTIVE ARRANGEMENTS IN COMMERCIAL/INDUSTRIAL EFFICIENCY PROGRAMS

Whole Building Retrofit

• Roof, wall, floor insulation: 20% of installed cost up to $10,000

• Duct and air sealing: $420

• Per square foot: $0.03 to $0.15

• Dollar per Therm: $0.75 to $1/Therm

• First Year savings $5/Mcf

• Per Dth Saved: $5 to $7

• Opaque shell insulation and air sealing leakage: 30% of cost up to $3,000

• Up to 50% of cost with a cap of $1,000

• Up to 20% of project cost with a maximum of $10,000

• Up to $100,000; if annualized therm usage is less than 40,000, then maximum incentive if $50,000

• Projects paid on a $/Therm, based on actual energy savings achieved by the building compared to

code. Incentive dollars are awarded on a sliding scale, based on the percentage of savings above

New Whole Building

• $1 per Therm up to 50% of project cost

• $5/Mcf for First Year savings

• Per Dth Saved: $5 to $7

• 75% to 100% of incremental costs

• Projects paid on a $/Therm, based on actual energy savings achieved by the building compared to

code. Incentive dollars are awarded on a sliding scale, based on the percentage of savings above

code.

Windows

•

Dollar

per

square

foot:

$0.25

to

$2.25

• Per square basis with a max of $2,500

• $1/sq ft with a limit of 2,5000 sq ft.

Programmable T‐Stats • Up to 50% of incremental cost


Food Service Equipment • Up to 40% of cost

• 80%

Energy Mgmt. Systems

• Up to $100,000. If annualized therm usage is less than 40,000, then maximum incentive if

$50,000.

• 30% to 80%


• Dollar per Therm: $0.75 to $1

• Rebated through CIP

Custom Incentive Programs

• Average value

• Up to 50% of installed project



• $5/Mcf; $7/Dth

• Lesser of 50% of project cost or $10/Saved Dth

• Incentive determined at 150% of customers’ First Year energy savings

• Dollar per Therm: $0.75 to $1

• Maximum project incentive payment not to exceed $25,000 or 30% of project cost. If simple

payback of project is less than 1.5 years, project does not qualify.

• Up to $100,000. If annualized therm usage is less than 40,000, then maximum incentive if

$50,000.

Other

• Gas Furnace Tune‐Up: $65

• Free spray valves

• Modulating Boiler Control: 25% up to $5,000

• Reset Control: $250

• Low Flow Showerheads: $4.24

• Low Flow Sprayer: $25

• Boiler Tune‐Up: $250 to $750

• Steam Traps: $25; 50% of equipment cost or $2,500

• Steam Trap Service: Lesser of $50 or 50% of service cost

• Integrated Condensing Boiler/ Water Heater: $1,000 to $1,600

• ECM Motor: $292/unit

• Refrigerator: $362/unit

• Aerators: $1.95

• Continuous Modulating Burners: 25% of equipment cost or $15,000

• Vent Damper: 50% of equipment cost or $500

• Solar heating: $3 per First Year estimated Therm savings

SEPARATE INDUSTRIAL

PROGRAM

• Custom Program: Up to 50%

• Gas Cooling: Up to $150,000

• Combined Heat & Power: Up to $500,000




Cost Effectiveness of Incentives Programs: Respondents were asked whether they assessedthe cost effectiveness of each incentive program, which tests they used, and whether eachprogram was found to be cost effective. Table 13 shows the number and percentage of programsthat used a cost test generally and the number and percentage of programs that that passed costeffectiveness overall.

According to the survey sample, 100 percent of the following programs were found to be costeffective for all measures: programmable thermostats, custom incentive programs, and energymanagement systems. This is followed by furnace programs (99 percent, or 66 of 69 programs)and food service equipment (97 percent). Ninety-five percent of boiler, new whole home/building,and window programs passed the cost test, followed by whole home/building retrofits (93 percent),clothes washers (88 percent), and tankless water heaters (85 percent).

Table 13

CUSTOMER INCENTIVE PROGRAMS AND COST EFFECTIVENESS

EE MEASURE PROGRAMS THAT

USED A COST TEST

PERCENTAGE

COST‐TESTED

REPORTED

TEST RESULTS

PASSED C.E.

TEST

PERCENTAGE

THAT PASSED

Furnaces (81 Programs) 69 85% 67 66 99%

Boilers (71 Programs) 69 85% 58 55 95%

Dishwashers (7 Programs) 6 86% 5 4 80%

Clothes Washers (21 Programs) 19 90% 17 15 88%

Storage Water Heaters (74 Programs) 64 86% 62 57 92%

Tankless Water Heaters (58 Programs) 50 86% 48 41 85%

Whole Home/Building Retrofits (49 Programs) 44 90% 42 39 93%

New Whole Home/Whole Building (42 Programs) 40 95% 37 35 95%

Windows (19 Programs) 19 100% 19 18 95%

Programmable Thermostats (53 Programs) 45 85% 44 44 100%

Food Service Equipment (39 Programs) 37 96% 35 34 97%

Energy Management Systems (24 Programs) 23 96% 21 21 100%

Custom Incentive Programs (33 Programs) 32 97% 32 32 100%

Other Products (25 Programs) 16 64% 16 14 88%

Table 14, on the next page, provides more details regarding the specific cost test used per productor incentive program. The tests are categorized as participant cost test (PCT), ratepayer impactmeasure (RIM), societal cost test (SCT), total resource cost (TRC), utility cost test (UCT), multi-test, or other. Table 14 also shows the number and percentage of programs that passed each ofthese tests. Many programs used multiple tests, while others used all five. Respondents wereasked about the cost effectiveness of each incentive program overall and not by customersegment, even though recognizing that the cost-effectiveness of a specific incentive program mayvary by customer segment. A brief description of the five common tests can be found on page 39.

Across efficiency measures, the total resource cost test was the most commonly employed,ranging from 33 percent (for dishwasher programs) to 62 percent (boiler programs). On the other




hand, with one exception, the participant cost test was not used. Also less used were theratepayer impact measurement and societal cost test.

Table 14

COST EFFECTIVENESS USED PER GAS EFFICIENCY INCENTIVE PROGRAM AND RESULTS PER TEST (NUMBER OF PROGRAMS & PERCENTAGE)

EE MEASURE TALLY

T YPE

Specific Test Administered Passed Specific Test

PCT RIM SCT TRC UCT MULTI OTHER ALL PCT RIM SCT TRC UCT MULTI OTHER

FURNACE # 1 3 3 35 6 11 2 6 1 3 3 34 6 11 2

81 PROGRAMS % 1% 4% 4% 51% 9% 16% 3% 9% 100% 100% 100% 97% 100% 100% 100%

BOILER # 0 0 3 37 6 6 2 4 0 0 3 34 6 6 2

71 PROGRAMS % 0% 0% 5% 62% 10% 10% 3% 7% n/a n/a 100% 92% 100% 100% 100%

DISHWASHER # 0 0 0 2 0 2 0 1 0 0 0 1 0 2 0

7

PROGRAMS

% 0% 0% 0% 33% 0% 33% 0% 17% n/a n/a n/a 50% n/a 100% n/a

CLOTHES

WASHERS # 0 0 0 7 4 5 0 1 0 0 0 5 4 5 0

21 PROGRAMS % 0% 0% 0% 37% 21% 26% 0% 5% n/a n/a n/a 71% 100% 100% n/a

STORAGE WATER

HEATER # 0 3 3 35 6 10 0 5 0 3 3 31 6 10 0

74 PROGRAMS % 0% 5% 5% 55% 9% 16% 0% 8% n/a 100% 100% 89% 100% 100% n/a

TANKLESS WATER

HEATER # 0 0 1 28 6 9 0 4 0 0 1 23 6 8 0

58 PROGRAMS % 0% 0% 2% 56% 12% 18% 0% 8% n/a n/a 100% 82% 100% 89% n/a

WHOLE HOME OR

BLDG. RETROFITS # 0 0 2 23 4 7 3 3 0 0 2 20 4 7 3

49 PROGRAMS % 0% 0% 5% 52% 9% 16% 7% 7% n/a n/a 100% 87% 100% 100% 100%

NEW WHOLE

HOME/BLDG. # 0 1 1 22 4 6 1 2 0 1 1 20 4 6 1 42 PROGRAMS % 0% 3% 3% 55% 10% 15% 3% 5% n/a 100% 100% 91% 100% 100% 100%

WINDOWS # 0 0 0 8 4 4 0 3 0 0 0 7 4 4 0

19 PROGRAMS % 0% 0% 0% 42% 21% 21% 0% 16% n/a n/a n/a 88% 100% 100% n/a

PROGRAMMABLE

THERMOSTAT # 0 3 2 24 4 6 2 3 0 3 2 24 4 6 2

53 PROGRAMS % 0% 7% 4% 53% 9% 13% 4% 7% n/a 100% 100% 100% 100% 100% 100%

FOOD SERVICE

EQUIPMENT # 0 0 2 22 4 5 1 1 0 0 2 21 4 5 1

39 PROGRAMS % 0% 0% 5% 59% 11% 14% 3% 3% n/a n/a 100% 95% 100% 100% 100%

ENERGY MGMT.

SYSTEM

# 0 0 1 9 4 5 0 2 0 0 1 9 4 5 0

24 PROGRAMS % 0% 0% 4% 39% 17% 22% 0% 9% n/a n/a 100% 100% 100% 100% n/a

CUSTOM

INCENTIVE PROG. # 0 0 3 18 5 4 1 1 0 0 3 18 5 4 1

33 PROGRAMS % 0% 0% 9% 56% 16% 13% 3% 3% n/a n/a 100% 100% 100% 100% 100%

OTHER # 0 1 1 6 1 4 1 2 0 1 1 4 1 4 1

25 PROGRAMS % 0% 6% 6% 38% 6% 25% 6% 13% n/a 100% 100% 67% 100% 100% 100%

While all the efficiency incentive programs passed the PCT, RIM, SCT and UCT tests, the moreinstructive survey answers relate to the TRC test. According to responses regarding the TRC, 100percent of programmable thermostat, custom incentive and energy management system programswere found to be cost effective (24, 18 and 9 programs, respectively). Other programs passed the




TRC as follows: furnace (34 of 35 programs), food service equipment (21 of 22), boiler (34 of 37),new whole home/building (20 of 22), storage water heater (31 of 35), windows (7 of 8), wholehome/building retrofit (20 of 23), tankless water heater (23 of 28), and other incentive programs (4of 6).

Efficiency Loans

As an alternative approach to reducing up-front costs, a number of efficiency programs providecustomers with the option of financing their energy efficiency upgrades. Twenty-two percent (24 of110 programs) provide customers access to loans, and of those, 92 percent (or 22 programs) offerfinancing in conjunction with other incentives (e.g., rebates). Eighteen of the 24 programs haveresidential energy efficiency loan programs, 16 have commercial, and 12 have industrial loanprograms. Of these, six offer loans to all customer segments.

Programs may offer interest-free loans, interest rate reduction programs, loans with interest, orsimply access to loans by a third party. Of the 24 programs, nine (or 38 percent) have interest-freeloans, eight (or 33 percent) offer to buy down the interest on the loan, and three (or 13 percent)

include both types of financing. Another 17 percent (four programs) have other financingarrangements, such as below-market fixed rates and other annual percentage rates.

A number of programs offer 10-year interest free financing for comprehensive whole houseprojects which are preceded by a home energy audit as a complement to statewide efficiencyprogram incentives. Similar programs are offered to comprehensive C & I energy improvementprojects. Others offer customers the choice between statewide rebates and utility financing.

Several ratepayer-funded energy efficiency financing programs integrate loan repayment into thecustomer’s monthly utility bill as a monthly installment repayment plan. Such “on-bill financing” (or“pay-as-you-save”) arrangements exist in nine of the loan programs (or 39 percent). In othercases, where the utility does not finance efficiency purchases, the financing comes through a non-

regulated affiliate and is billed through the standard gas bill.

Thirty-five percent of loan programs (8 of 23) are administered in house, while 65 percent (or 15programs) are processed by a third party. In another case, the gas utility administers the loan,while the electric utility actually funds the financing.

Table 17

NATURAL GAS EFFICIENCY FINANCING PROGRAMS 24 PROGRAMS

SEGMENT PROGRAMS LOAN TYPE PROGRAM

PERCENTAGE

LOAN

ADMINISTRATOR

PROGRAM

PERCENTAGE

Residential 18 Interest‐Free 38% In‐House 33%

Commercial 16 Interest Rate Buy‐Down 33% Third‐party 63%

Industrial 12 Both 13% Both 0%

Other 17%




Internal Tracking Systems: When asked whether they used an internal system to track naturalgas efficiency programs, 71 of 108 respondents (or 66 percent) indicated that they did. Of these,70 percent developed their tracking system in house, 10 percent used a specialized off-the-shelftracking package, and 18 percent had their tracking software customized by a vendor. Anotherone percent used a combination of in-house and vendor-customized systems (see Table 18).

Table 18

INTERNAL PROGRAM TRACKING SYSTEMS 71 PROGRAMS

PROGRAMS PERCENT

Developed In‐House 50 70%

Specialized Off ‐the‐Shelf 7 10%

Customized by Vendor 13 18%

Both In‐House & Vendor‐Customized 1 1%

Efficiency Program Marketing

Natural gas efficiency programs are promoted via an array of marketing efforts in the form ofcollateral materials, internet tools, direct outreach, trade and home show promotions, training, printads, press releases, radio commercials and/or TV and cable advertisements. Ninety-five percentof programs (105 of 110) use a number of these efficiency marketing approaches. Twenty-two ofthese programs employ all outreach tools. As seen in Figure 4, the most widely adopted outreachmethod is the distribution of collateral materials, such as brochures and bill inserts (97 percent ofprograms), followed closely by internet tools (93 percent), and direct contact (91 percent).

Figure 4

0

20

40

60

80

100

120

10298

96

83

7966

62

56

39

17

M a r k e t i n g a n d A d v e r t i s i n g A c t i v i t i e s

Natural Gas Efficiency Program Marketing and AdvertisingTotal = 105 programs that include one or more activity

Gas Eff iciency Program Characteristics




Respondents were asked to identify which of two audiences (end users and/or trade allies) theysought to reach with each marketing approach, realizing that it is more difficult to identify orsegregate a target audience via internet tools, print ads, and trade shows. As shown in Table 19on the next page, in all marketing categories, a greater percentage of programs directed theirefforts toward end users than those targeting trade allies. One exception is with training programs:

57 percent of these programs are geared toward end users, while 75 percent are developed fortrade allies.

While recognizing that the success of each approach varies per target market and that successrankings tend to be subjective, we asked respondents to rank the success of each combined effort,where a rating of 1 signifies “most successful” and 10 indicates “least successful.” Table 19 showsthe number of respondents that rated each approach per target audience, the average successranking of each approach, and the percentage of rankings that fall within one of three successranges (high, medium and low). The marketing tools are ordered according to success ranking,starting with the most successful according to survey response. For end users, direct outreach andcollateral materials were ranked highest, followed by print ads and the internet.

With respect to trade allies, a small number of respondents ranked other approaches highest.More representative and highly ranked were collateral materials, followed by direct outreach, tradeand homes shows, and internet tools.

Other marketing approaches include contractor/vendor promotions, elementary schoolconservation education outreach (indirect outreach to parents), social media, sponsorship ofcollegiate sports and professional basketball teams, billboards, workshops, truck wraps,giveaways, full newspaper articles covering programs, energy fairs, and trade/industry associationmemberships and sponsorships. Other examples include TV coverage of energy efficiency events,a local cable community TV program, and direct mail to area HVAC contractors with email updatesregarding programs. Also cited as very successful were outreach to local real estate offices and to

various community groups (including environmental commissions, green fairs and rotaries).




Table 19

SUCCESS OF MARKETING APPROACHES AND TARGET AUDIENCE

MARKETING TO END USERS

Marketing Approach Programs Using this Tool

Programs Targeting End

Users

Success Ratings

Number of

Programs Percentage

Number of

Ratings

Average Success

Ranking

High Ranking

1 ≤> 4

Mid Ranking

4 ≤≥ 6

Low Ranking

> 6

Direct Outreach 96 82 85% 70 3.9 57% 21% 21%

Collateral Materials 102 95 93% 80 3.9 56% 24% 20%

Print Ads 79 75 95% 61 4.6 31% 51% 18%

Press Releases 62 54 87% 39 4.7 31% 44% 26%

Internet 98 91 93% 75 4.8 31% 41% 28%

Other 17 16 73% 13 4.9 23% 54% 23%

Trade & Home Shows 83 77 93% 61 5.2 21% 49% 30%

Radio Ads 66 62 94% 47 5.4 15% 60% 26%

TV/Cable 39 37 95% 27 5.5 33% 19% 48%

Training 56 32 57% 19 6.3 5% 58% 37%

MARKETING TO TRADE ALLIES

Marketing ApproachPrograms

Using this Tool

Programs Targeting Trade

Allies Success Ratings

Number of

Programs Percentage

Number of

Ratings

Average Success

Ranking

High Ranking

1 ≤> 4

Mid Ranking

4 ≤≥ 6

Low Ranking

> 6

Other 17 9 53% 6 1.8 100% 0% 0%

Collateral Materials 102 48 47% 42 3.9 50% 33% 14%

Direct Outreach96

57

59%

49

4.3

57%

6%

37%

Trade & Home Shows 83 41 49% 32 4.4 34% 44% 22%

Internet 98 47 48% 39 4.5 38% 31% 31%

Print Ads 79 24 30% 18 4.8 22% 56% 22%

Training 56 42 75% 31 5.0 52% 6% 42%

Press Releases 62 18 29% 13 6.0 23% 23% 46%

Radio Ads 66 12 18% 8 6.3 0% 50% 38%

TV/Cable 39 7 18% 4 9.0 0% 0% 100%

In terms of funding for efficiency marketing, 89 percent of respondents (87 of 98) indicated theyhave a set budget specifically for promotional activities. They also relayed what percentage oftheir overall efficiency program budget was spent on advertising or marketing. Based on theseresponses, programs spent between 0.6 percent and 60 percent of natural gas efficiency programdollars on advertising/marketing. The median spending was five percent of total efficiency programfunds.




Table 20 breaks down program promotional spending into ranges as a percentage of total programdollars. As shown, 45 percent of programs (39 of 87) spent more than five percent of theirefficiency program budget on marketing and outreach. Only six percent used more than 25percent of their overall efficiency program dollars for marketing.

Table 20

MARKETING FUNDS AS A PERCENTAGE OF OVERALL NATURAL GAS EFFICIENCY PROGRAM BUDGET 87 PROGRAMS

PERCENTAGE RANGE OF PROGRAM BUDGET NUMBER OF PROGRAMS

1% or less 7

1% > ≤ 5% 41

5% > ≤ 10% 17

10%

>≤

25%

17

25% > ≤ 50% 4

Greater than 50% 1

Other Programs: Codes & Standards and Emerging Technology Demonstrations

Nine percent of respondents (10 of 110) indicated that their natural gas efficiency program includesa regulator-approved ratepayer-funded codes and standards advocacy program, which promotesimprovements to building efficiency codes and to appliance standards. This is achieved throughstudies, drafting guidelines, research, expert testimony, stakeholder meetings, marketing, andcompliance improvement activities.

Some accomplish this by funding the codes and standards advocacy efforts within a statewideprogram. Others engage third-party vendors to provide regular training for codes compliance, orthey fund energy efficiency continuing education credits for residential and commercial buildersand contractors. Others work with dealers and contractors to encourage the use of high efficiencyappliances (e.g., tank style water heaters with the highest energy factor ratings). Still otherspromote above code construction practices in their new construction efficiency programs.

Fifteen percent (17 of 111) of respondents indicated that their natural gas efficiency programincludes pre-commercial demonstrations of emerging technologies. Of the 17, three stated thattheir public utility commission requires such demonstrations. Another utility, based in Canada,voluntary participates in demonstration projects outside the energy efficiency budget.




II. Natural Gas Efficiency Program Funding and Impacts

This section describes utility funding for natural gas efficiency programs in the U.S. and Canadaand the resulting annual energy saving impacts. Program year 2010 expenditures correspond tofunding by 131 utilities for programs administered either by the utility or by a third party, such as anonprofit public benefit organization or a state agency that runs a statewide program. A small part

of 2010 expenditures were not finalized and will be subject to true-up. Approved budgets for 2011represent planned funding for 128 programs (including two launched in 2011). Budget data werecollected during spring and summer 2011; therefore, any budgetary changes made after thisperiod—due to newly approved programs or funding cuts—are not reflected in this report. Somedollars reported for 2011 represent carryover of unspent funds from 2010.

Respondents were asked to break down 2010 expenditures and 2011 budgets by customer classor segment. Where data were not available by segment, a slight percentage of respondentsreported overall spending amounts in the “Other” category. Also where respondents were unableto break down spending for specific activities (such as evaluation, measurement and verification)by customer segment, they placed these dollar amounts under “Other.” Also some respondentswere not able to separate low-income program dollars from residential program funds (either

overall or for specific activities, such as education and online resources), and a small number ofcommercial program dollars were combined with residential program funds.

All natural gas efficiency program dollars discussed in this report are sourced from ratepayers.Some efficiency program funds originate from other sources, such as utility shareholders andAmerican Recovery and Reinvestment Act (ARRA) dollars. A small number of survey respondentsdid receive stimulus dollars and other non-ratepayer funds for efficiency programming, all of whichhave been excluded from this report. The scale of these non-ratepayer funds is very smallcompared to the ratepayer program dollars reported in this study: stimulus dollars amount to 0.12percent of the total 2010 U.S. efficiency expenditures reported on the next page, and other non-ratepayer funding represents 0.10 percent and 0.13 percent of 2010 U.S. program expendituresand 2011 budgets, respectively. Given that the reporting methodology varies among respondents,

expenditure and budget data should be regarded as estimates rather than exact figures.




Natural Gas Efficiency Program Expenditures and Funding

In the United States, utilities spent $838 million in 2010 on natural gas efficiency programs. Alsothey have budgeted nearly $1.2 billion for the 2011 program. Program expenditures reached $914million in North America (U.S. and Canada) in 2010. Cumulative North American program budgetsare expected to approach $1.3 billion in 2011 (see Table 21). Appendix B and C present a

breakdown of 2010 expenditures and 2011 budgets by state and region.

Table 21

NATURAL GAS EFFICIENCY PROGRAM EXPENDITURES AND BUDGETS BY CUSTOMER CLASS1

2010 EXPENDITURES ($ MILLION)2

131 PROGRAMS

2011 BUDGETS ($ MILLION) 128 PROGRAMS (2 PLANNED FOR 2011)

3

CUSTOMER SEGMENT U.S. CANADA4 N. AMERICA U.S. CANADA N. AMERICA

Re side ntial $389.0 $16.6 $405.5 $511.5 $19.2 $530.6

L ow‐ Income $180.4 $8.0 $188.4 $222.6 $18.5 $241.1

Comme rcial 5 $180.4 $19.3 $199.8 $276.7 $21.2 $297.9

Industrial $19.6 $9.0 $28.7 $36.4 $13.2 $49.5

Othe r $59.2 $22.4 $81.6 $115.9 $33.1 $149.0

EM& V 6 $9.4 $0.7 $10.1 $26.5 $0.4 $26.9

TOTAL7 $838.0 $76.1 $914.1 $1,189.6 $105.5 $1,295.0

1 While most program budgets coincide with the calendar year, 23 percent do not, and thus their program year begins in

one calendar year and ends during the next.

2 Some 2010 funds represent unspent dollars carried over from the 2009 program year. Carryover funds are not included in

2011 budgets. Not all reported 2010 expenditures represent a full year, because a number of programs were launched

after January 1, 2010. 3

About 7 percent of 2011 budgets had not been approved at the time the data were submitted to AGA, or only the half of

the year had been approved while the balance remained under the projected status.

4 All currency is reported in U.S. dollars. This report uses the July 8, 2011 exchange rate of 0.9544 USD = 1 CAD.

5 A small percentage of commercial funds represent combined C&I dollars as follows: about 6 percent of 2010 commercial

expenditures in the U.S. and 5 percent in North America, and about 8 percent of 2011 commercial budgets in the U.S. and

7 percent in North America include industrial funds.

6 Less than 1 percent of funds across segments represent EM&V funds not included in the EM&V category.

7 Subcategories might not add up exactly to reported totals due to rounding.




Figure 5 presents natural gas efficiency program funds from 2007 through 2011. This comparisonis intended for illustrative purposes, since spending growth cannot be entirely attributed to new andexpanded programs but also to differences in survey samples from one year to the next.

Figure 5

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2007 2008 2009 2010 2011 Budget

$329 million53 programs




$1,295 million128 programs

U S D o l l a r ( m i l l i o n

$ )

Natural Gas Efficiency Program Expenditures in the U.S. and Canada

Canada

United States

Gas Efficiency Program Funding and Impacts

Program funding in North America increased by 5.1 percent from 2009 to 2010 and is expected togrow 42 percent in 2011. In the United States, program funding grew 4.4 percent in 2010 from$803 million, and a 42 percent increase is expected in 2011.

As shown, natural gas efficiency program spending clearly leveled off in 2010 relative to the 42

percent growth seen from 2008 to the 2009 program year. In fact, a comparison of 2010 actualefficiency expenditures to the aggregate 2010 budget that was reported during the previous surveycycle (for all companies participating in both surveys) indicates that U.S. programs spent only 73percent of the $1.14 billion 2010 efficiency program budget. In North America, programs spent 74percent of the $1.23 billion budget that had been reported for the 2010 program year. The mostobvious contributing factor to this decreased spending rate is the economic downturn that hit in late2008 of and the very slow recovery since then.




A look at 2010 natural gas efficiency program expenditures across sectors shows that NorthAmerican utilities apportioned 44 percent of funding for residential programs, 21 percent for low-income, 22 percent for commercial, three percent for separate industrial programs, and ninepercent for other program activities (see Figure 6).

Figure 6

Residential$405.5 million

Low-Income$188.4 millionCommercial

$199.8 million

Industrial

$28.7 million

OTHER$91.7 million

2010 Natural Gas Efficiency Program Expenditures by Customer Class131 programs in N. America = $814.1 m illion

Gas Eff iciency Program Funding and Impacts

44%9%

22%

21%

3%

The other category includes expenditures that were not provided by customer segment. Also inthis category are programs that cross-cut residential and non-residential customers segments.These include baseline studies and market research (including technology and market trials andpilot programs), planning and project development, consultation and cost effectiveness analyses,EM&V, market transformation programs, marketing (including statewide marketing and specialprojects such as non-profit kits), non-program specific administration costs (e.g., salaries,transportation, rebate processing), information systems upgrades (including tracking systems),conservation and efficiency education (e.g., school-based, online calculators, community educationpilot), efficiency and technology training, and regulatory and state oversight expenses (e.g., third-party alternative filings).

Also included under other expenses are carry-over funds from prior program year, governmentpartnerships, codes and standards, product development, emerging technologies, demand-sidemanagement coordination and integration, workforce education and training, state homeimprovement and conservation loan subsidies, financing programs, financial audit fees, buildingoperator certification, solar thermal water heating, renewable energy, and agricultural programs.




Figure 7 shows the distribution of natural gas efficiency program funding among sources in 2010.Ninety percent of programs are funded solely by ratepayers (via base rates, system surcharges ornatural gas efficiency tariffs), one percent by shareholders only, seven percent by shareholdersand ratepayers, and three percent via other arrangements.

Figure 7

Ratepayers(101 programs)

Ratepayers &Shareholders (8)

Other Arrangements (3)

Natural Gas Efficiency Program Funding Sources(112 programs)


90%7%

3%

Based on 98 survey responses, utilities disbursed from 0.0007 to 13.9 percent of net natural gasdistribution revenues (net of gas costs) for natural gas efficiency programs in 2010. The medianspending was 1.2 percent of net distribution revenues. Of the 98 responding companies, 40 usedless than one percent of net distribution revenues for natural gas efficiency programs, 46 used onepercent to less than five percent, and 12 spent five percent or more.

Natural Gas Efficiency Program Savings Impacts

Estimated 2010 annual natural gas savings impacts were reported for 121 programs by customerclass. Respondents were requested to report energy savings realized by gas efficiency measuresduring the 2010 calendar. This includes calendar year savings from natural gas efficiencymeasures already in place on the first day of the year (i.e. installed prior to 2010) as well asincremental savings realized from new measures implemented during the year. A small number ofrespondents were limited by the manner in which they track and report energy savings and thusdid not provide annualized savings as defined above (with pre-existing measures and participationtaken into account) but rather reported only incremental, or first-year, Therm savings (representingroughly 4 percent of the energy savings overall).

Data were not available for a number of respondents, either because savings are not tracked ornot yet available for 2010. In some of these cases, estimates were provided based on prior yeardata. While the majority of respondents provided calendar year savings accumulated in 2010,




some were able to report only for the most recent program year (with, for example, some programmonths falling in 2009 and some in 2010). Where data were not available by segment, a slightpercentage of respondents reported overall savings in the “Other” category.

Respondents were also asked for net impacts—that is, to exclude free riders, spillover, savingsdue to government mandated codes and standards, reduced usage owed to weather or business

cycle fluctuations, and reduced usage because of natural operations of the marketplace (e.g.,higher prices). Respondents provided net impacts corresponding to 64 percent energy savings inthe U.S. and 71 percent of energy savings in North America, respectively. The balance of energysavings represents gross savings.

Many respondents report deemed savings—a set calculation of savings per measure, developedpre-installation, with built-in assumptions regarding free ridership and other specifications.Some respondents were unable to separate low-income program savings from overall residentialprogram savings, while others combined commercial program savings with residential impacts.Still others included savings for multi-family programs with C&I program savings. These combinedcategories represent a very small percentage of the data. Given that the reporting methodologyvaried among respondents, natural gas savings data should be regarded as estimates rather than

exact figures.

As shown in Table 22, in 2010 U.S. utilities saved nearly 808 million Therm (or 80.8 trillion Btu)through natural gas efficiency programs, thus avoiding 4.8 million metric tons of carbon dioxideemissions (CO2). Natural gas savings in North America were about 1.35 billion Therm (or 134.6trillion Btu), the equivalence of 7 million metric tons of avoided CO 2 emissions. For a breakdown ofsavings impacts by region, see Appendix D.

Table 22

2010

NATURAL

GAS EFFICIENCY

PROGRAM

SAVINGS

IMPACTS BY

CUSTOMER

CLASS

(MILLION THERM) ‐ 121 PROGRAMS

SECTOR UNITED STATES CANADA N. AMERICA

Re side ntial 319.2 112.5 431.7

L ow ‐ Income 48.3 122.6 170.9

Comme rcial 237.9 260.9 498.8

Industrial 162.2 40.6 202.8

Othe r 1 40.5 1.3 41.8

TOTAL2 808.2 537.8 1,346.0

1 The other category represents cross‐cutting programs similar to those discussed under Program Expenditures

on page 34.

2 Subcategories might not add up exactly to reported totals due to rounding.




Figure 8 shows natural gas efficiency program savings from 2008 through 2010. This comparisonis for illustrative purposes, because this growth cannot entirely be attributed to new and expandedprograms but also to differences in survey samples from one year to the next.

Figure 8

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

2008 2009 2010

81.0 TbtuR

86 programs

89.8 Tbtu98 programs

134.6 Tbtu121 programs

T r i l l i o n B t u

Canada

United States


Natural Gas Efficiency Program Savings Impacts in North America

Natural gas efficiency program savings grew by nearly 53 percent in 2010 to 80.8 trillion Btu (from52.9 trillion Btu in 2009). Savings in North America increased nearly 50 percent (from 89.8 trillionBtu in 2009 to 134.6 trillion Btu in 2010). These growth rates are tremendous, particularly whencompared to the 2008-2009 one-year growth rates of 9.3 percent and 10.9 percent, respectively forthe U.S. and North America. This growth in savings might also be surprising when considering lowgrowth in spending from 2009 to 2010, as mentioned earlier.

One likely explanation is the lag that often occurs between efficiency program outlays and the

realization of savings associated with these program investments. For example, in 2009 U.S.programs invested $802.6 million dollars (a 42 percent growth from prior year spending), and inNorth America, spending reached $869.6 million (a 38 percent increase from 2008. Also of the121 programs for which 2010 energy savings are reported, 22 were launched in 2009. Thus, thesenew programs account for some of this growth, particularly since new programs often ramp upimplementation gradually, and for many programs, savings are evaluated only after a one-yearimplementation period. Finally, as discussed earlier, 43 percent of respondents reported that theyexpanded their efficiency programs in 2010.

A look across segments at 2010 natural gas efficiency in the United States shows that 39 percentof energy savings are attributed to residential programs, 6 percent to low-income activities, 29percent to commercial programs, and 20 percent to industrial accounts. Five percent of U.S.




natural gas savings is classified as “other,” representing data not allocable by customer class andincluding estimated savings for education, general outreach, codes and standards, and pilotprograms.

In North America, residential program savings account for 32 percent of overall savings, lowincome program savings for 13 percent, commercial savings for 37 percent, and industrial savings

for 15 percent. Three percent of N. American natural gas savings is classified as “other” (seeFigure 9).

Figure 9

Residential

431.7 million Therm

Low Income170.9 million Therm

Commercial498.8 million Therm

Industrial202.8 million Therm

Other

41.8 million Therm

2010 Natural Gas Efficiency Program Savings by Customer Class121 Programs in N. America -- 1,346 million Therm (134.6 trillion Btu)


32%

13%

37%

3%

15%

In the U.S. annual natural gas savings per efficiency program participant averaged 9.9 percent forresidential participants and 11.7 percent overall. Natural gas savings per year averaged 187.7Therm per U.S. customer overall (compared to an average 122 Therm/year in 2009) and 75.8Therm per residential customer per year (compared to an average 69 Therm/year in 2009).Residential energy savings translate to average cost savings per customer of $62 on annual

energy bills.7 This contrasts with 2009 average avoided costs savings of $83 annually perresidential customers—even though average residential energy savings have increased—due tolower residential end-use gas prices in 2010.

7Natural gas efficiency program data for both participant counts and annual savings were available for 88 U.S. programs. Average costsavings were derived from survey data for the 88 programs as well as Energy Information Administration (EIA) consumption data percompany by end use and EIA national average natural gas residential end-use price (2010 data not yet available).




III. NATURAL GAS EFFICIENCY PROGRAM PLANNING AND EVALUATION

Survey respondents were asked to describe their approach to natural gas efficiency programplanning, measurement and evaluation. Forty-four percent of respondents (48 of 109) completed afull scale or smaller market assessment (or some form of efficiency potential, baseline, or feasibilitystudy) before implementing their natural gas efficiency programs.

The majority of respondents include an evaluation, measurement and verification (EM&V)component in their natural gas efficiency program. However, not all were able to report EM&Vexpenditures and budgets for one of the following reasons: EM&V funds form part of theadministrative budget, in-house evaluations are covered under other program expenses,incremental costs are not itemized, no evaluation report is due this program year, and contractnegotiations with third-party EM&V vendors are ongoing.

Expenditures for 2010 EM&V were obtained for 63 programs and 2011 EM&V budgets were providedfor programs. EM&V expenditures exceeded $9 million in the U.S. in 2010 and are estimated toapproach $27 million in 2011—a 183 percent increase. In North America, 2010 EMV spendingsurpassed $10 million and is expected to approach $27 million in 2011 (see Table 23). These

expenditures were lower than in 2009.

Table 23

EVALUATION MEASUREMENT & VERIFICATION EXPENDITURES AND BUDGETS

REGION 2010 EXPENDITURES ($)

63 PROGRAMS

2011 BUDGET ($) 58 PROGRAMS

UNITED STATES $9,381,795 $26,538,195

CANADA $736,784 $391,986

N. AMERICA $10,118,579 $26,930,181

In 85 percent of programs (88 of 103), the utility is responsible for conducting the impactevaluation, and in 14 percent the evaluation is under the purview of the regulator. One programreported a shared responsibility between utility and regulator. When the utility is the responsibleparty, the evaluation is conducted by a consultant in 58 percent of programs (52 of 89), by in-house staff in 29 percent (or 26 programs), and by both internal staff and outside agent in 12percent (or 11 programs). In the latter case, in-house staff may oversee and coordinate multipleindependent evaluation consultants that are conducting impact evaluations and processassessments.

Ninety-four percent of respondents (103 of 109) indicated that they are required to report naturalgas efficiency program impacts at regular intervals to their regulator or other authority. Others arerequested to submit for informal evaluations instead of a formal impacts report. When asked howoften evaluators must submit a program report, respondents selected one or more timeframes,depending on the type of evaluation and intended recipient.




Table 24 shows the reporting cycles required by regulators for natural gas efficiency programimpact evaluations. Seventy-nine percent of respondents are required to submit an annual reportat minimum. Some are required to report more frequently (e.g., semi-annually, quarterly, and/ormonthly), while others report less frequently (e.g., once in three years, in five years or in six years).Thirty percent of respondents are required to report net gas savings impacts to regulators oranother state authority, while 48 percent report gross savings and 22 percent include both in their

report.

Table 24

EFFICIENCY PROGRAM REPORTING REQUIREMENT (103 programs with one or more reporting cycles)

REPORTING FREQUENCY PROGRAMS

Monthly 20

Quarterly 30

Annually 81

All of the above 11

Other 12

When assessing annual energy savings derived from direct impact natural gas efficiency programs,50 percent of respondents (53 of 105) determine savings at the individual program level, fourpercent (or 4 programs) at the overall portfolio level, and 46 percent (or 48 programs) at both.Twenty percent of respondents (22 of 109) also determine energy savings that are achieved fromindirect impact programs (such as contractor certification, efficiency and conservation education,energy audits, and contractor or building operator training).

Of the 96 natural gas efficiency programs for which cost effectiveness is evaluated, 35 percent (or34 programs) are assessed at the individual program level, 11 percent (or 11 programs) at theportfolio level, and one percent (or one program) at the customer segment level. Thirty-onepercent (30 programs) determine cost effectiveness for both individual program and the portfoliooverall, and 20 percent (19 programs) conduct tests at all three levels. In several programs, cost-effectiveness tests are conducted at the measure level, including custom measures. In othercases, the investor owned utilities are required to conduct various cost-benefit tests at multiplelevels, and the small and multi-jurisdictional utilities within the same state are allowed to mimic theirprogram measures and savings levels.




Table 25 shows how respondents answered when asked to identify all tests used to determinecost-effectiveness. The most prevalent test is the Total Resource Cost test (TRC), used by 84percent of respondents (81 of 96), whereas the Societal Cost Test was least used—by only 26percent of respondents. Sixteen percent (or 15 respondents) reported using all five tests.

Table 25

TESTS USED TO DETERMINE NATURAL GAS EFFICIENCY PROGRAM COST‐EFFECTIVENESS8

96 programs with one or more test

TEST TYPE PROGRAMS

Participant Test (PCT) Calculates quantifiable costs (e.g., out of pocket expenses of participating in program) and benefits

(e.g., reduction in utility bill, rebate payments, tax credits) to participating customers

45

Ratepayer Impact Measure (RIM) Applies only to utility programs—measuring impact on all consumer bills/rates because of changes in

utility revenues and operating costs due to program implementation

40

Societal Cost Test (SCT) Broader version of TRC adopting a societal perspective—measuring not only participants’ and utility’s

costs but also externality cost and benefits (e.g., environmental impacts)

25

Total Resource Cost (TRC) Measures net program costs—including both participants’ and utility’s costs (e.g., equipment and

installation, operation and maintenance and other related costs of participant and utility) and benefits

(e.g., avoided supply costs, natural gas delivery cost reductions, tax credits)

81

Utility Cost Test (UCT) Narrower version of TRC—excluding participant costs and measuring net costs incurred by program

administrator (e.g., customer rebates and other financial incentives) at the utility (UCT applies) or at

other organization (PAC applies)

59

Nineteen percent of respondents (21 of 108) indicated that a reduction of greenhouse gas (GHG)or carbon emissions is a performance target for their natural gas efficiency program. Of the 21,twelve respondents (or 11 percent) track such reductions. Two others do not consider emissionsreduction a performance measure, yet they track it and, in some cases, report their findings. Threeothers, who do not track emission savings, reported that they do consider them when selectingcost effective measures.

When asked how they calculate energy efficiency gains for specific programs or measures,respondents indicated that they use source-to-site energy measurement in about eight percent of

programs (8 of 104), and site-only measurement in 91 percent of programs.

9

One respondentreported using both types of measurement. Seventeen percent of the respondents that measuresource efficiency are guided by regulatory or legislative requirements, while 83 percent do sobecause of available recourses.

8For a thorough description of cost tests, see Model Energy Efficiency Program Impact Evaluation Guide , A Resource of the NationalAction Plan for Energy Efficiency, November 2007, www.epa.gov/cleanenergy/documents/evaluation_guide.pdf

9Source energy—also known as full fuel cycle analysis—is a more accurate measurement of efficiency. Site energy analysis accountsfor energy used or consumed only by the end-user at the usage site. On the other hand, a full fuel cycle analysis takes into accountnot only onsite energy consumption but also consumption and losses during the production, generation, transmission and distributioncycles. This allows for a realistic comparison of relative efficiency among different technologies, especially when comparing theefficiency of natural gas applications from source to site with that of other fuels.




Forty-four percent of those programs that test site efficiency use this approach because oflegislative or regulatory requirements, 40 percent because of available resources, and 16 percentfor other reasons. These reasons include the following: 1) common practice for utility-sponsoredprograms, 2) consistency with other utilities in same jurisdiction, 3) a limitation to use deemedsavings in the regulator-developed calculation, 4) in compliance with Energy Star standards, 5)current practice for statewide programs, 6) believed to be a true measurement of efficiency, and 7)

does not have regulatory approval.




IV. NATURAL GAS EFFICIENCY REGULATORY REQUIREMENTS AND COST RECOVERY TREATMENT

This section describes some of the regulatory and legislative requirements and allowances thatgovern natural gas efficiency programs in the United States, including state potential studies,efficiency program spending requirements, rules for low-income programs, recovery of directprogram costs, lost margin recovery, financial incentives for well-performing programs, carbon

offset programs, and fuel switching to natural gas. Data were provided for 108 U.S. programs,although not all respondents answered all questions.10

Potential Studies

Every so often state policy makers conduct potential studies through which they gather key data toinform their decisions pertaining to energy efficiency policies and objectives. The data mightinclude baseline energy usage and other market statistics, economic outlooks, energy forecasts,implementation costs, and cost-benefit assessments for various efficiency program components.These studies help decision makers set achievable goals (in terms of investments, outcomes andtimeframes), quantify energy efficiency as a resource, determine funding levels to attain goals, and

forecast the long-term savings potential of energy efficiency investments.11 According to surveyresponses, market studies were conducted in twenty-one states to assess the economic andefficiency potential of implementing natural gas efficiency programs. New Potential studies are inprogress in seven states. Table 26 shows the year in which the most recent studies werecompleted for each of the twenty-one states.

Table 26

STATE ENERGY EFFICIENCY POTENTIAL MARKET STUDIES COMPLETED IN 21 STATES & IN PROGRESS IN 7 STATES

MOST RECENT YEAR FOR COMPLETED STUDY NUMBER OF STATES STATE LIST

2004 1 UT

2005 3 FL, IN, NM

2007 1 OR

2008 5 CO, IA, MI, NH, NJ,

2009 5 CA, CT, MN, OH, PA

2010 6 IL, MA, NY, VA, WA, WI

NEW STUDIES IN PROGRESS 7 AZ, CA, IN, MI, MO,NH, VT

10 Appendix A shows natural gas efficiency program practices and regulatory requirements by state and for Canada. This includesmarket assessment studies, mandated utility funding for natural gas efficiency programs, requirements for low-income residentialprograms, approved recovery for direct program costs and lost margins, utility performance incentives, fuel switching and source-to-siteenergy measurement.

11More information is provided in a Guide for Conducting Energy Efficiency Potential Studies , A Resource of the National Action Plan forEnergy Efficiency, November 2007, http://www.epa.gov/cleanenergy/documents/suca/potential_guide.pdf




Natural Gas Efficiency Program Requirements and Policy Goals

Many state policy makers have mandated that utilities invest in natural gas efficiency programs.Twenty-eight states require utilities to fund efficiency programs, by way of regulatory order (in 18states), legislative bill (in 13 states) or through both regulation and legislation (in 15 states).

The goals that drive efficiency program funding requirements are energy conservation and savings(76 programs in 28 states), customer dollar savings or bill reduction programs (38 programs in 19states), greenhouse gas or carbon emission reductions (30 programs in 13 states), and “green

jobs” creation (15 programs in eight states). Twenty states have set more than one goal, of whichfive pursue all four targets. Other goals were stipulated in two other programs (two states), one ofwhich is to reduce gas usage for low income customers (see Table 27).

Table 27

POLICY GOALS GOVERNING EFFICIENCY PROGRAM IMPLEMENTATION

GOALS NUMBER OF

PROGRAMS NUMBER OF STATES

Increase Energy Savings 76 28

Reduce Customer Energy Bills 27 19

Reduce GHG or Carbon Emissions 30 13

Create Green Jobs 15 8

Other Goals 2 2

Rate Structures and Regulatory Treatment Aligned with Utility and Energy Efficiency Goals

An investor-owned utility has an intricate accounting and rate setting methodology to recover itscosts. Many resources explain utility accounting and rate design in depth.12 For the purpose ofthis report a simplified, brief description is provided as background for relaying the policies thathave been progressively adopted to protect utilities from losses associated with energyconservation practices and to incentivize them to invest in energy efficiency programs.

When setting rates, an investor-owned utility negotiates with its regulator (public utility/service

commission) what it is permitted to charge its customers in order to be able to continue to meet itsobligation to serve its customer base. These rates are calculated to match the revenuerequirement of the utility, allowing it: 1) to recover its incurred costs—both variable and fixed, 2) topay the interest cost on its capital debts, and 3) to earn a return for shareholders on investments.The profit margin is approved by the regulator who sets the rate of return (or percentage) the utilitymay earn on its equity (a return on equity or ROE).

12For a thorough explanation of utility rate-design policies that support utility commitments to efficiency programs, see Aligning Utility Incentives with Investment in Energy Efficiency , A Resource of the National Action Plan for Energy Efficiency, November 2007,http://www.epa.gov/cleanenergy/documents/suca/incentives.pdf.Also visit the AGA Rate Roundup: A Periodic Update on Innovative Rate Designs web page: http://www.aga.org/our-issues/RatesRegulatoryIssues/ratesregpolicy/rateroundup/Pages/default.aspx




In traditional rate designs, a portion of fixed costs are recovered via a volumetric charge or a priceper Therm. With this rate structure—because energy consumption varies while infrastructure costsremain fixed in the short term—the utility is at risk of under-recovering its fixed costs shouldcustomers reduce their gas consumption. (In the long-term, it is thought that reductions in usageshould eventually result in reduced natural gas supply capacity requirements and thus decreasedcapital costs, thereby eventually reducing costs for customers.) Also decreased energy usage that

results from successful efficiency program implementation can negatively impact the utility’srevenues, furthering the disincentive for utilities to promote efficient energy use.

With growing interest in energy conservation and demand side management, policy makers haveincreasingly approved mechanisms that allow utilities to recover the direct costs and the marginlosses associated with implementing energy efficiency programs. Policy makers have alsoapproved financial rewards to shareholders for investments in energy efficiency programs—quantifying the value of these demand-side programs and treating them similar to supply sideresource investments (e.g., distribution infrastructure, transportation capacity, undergroundstorage, etc.).

Respondents identified 39 states that allow utilities to recover the direct costs of natural gas

efficiency programs, 30 states that permit recovery of lost margins due to efficiency programimplementation, and 15 states that financially reward utilities for well-performing natural gasefficiency programs (see Figure 10).

Figure 10

0

5

10

15

20

25

30

35

40

Direct CostRecovery

Lost MarginRecovery

Performance-Based Incentives

39

30

15

N u m b e r o f S t a t e s

Regulatory Treatment for Gas Efficiency ProgramDirect Costs, Lost Revenues and Performance Incentives

Gas Efficiency Regulatory Treatment

Recovery of Energy Efficiency Costs

Energy efficiency program costs are divided into two categories: direct costs and margin costs.Direct costs may be recovered in three ways: Through base rates, trackers (e.g., tariff riders, billsurcharges), or deferral accounts. Margin losses (and gains) are adjusted and recovered in one of




two ways: Deferred and recovered via base rates (e.g., revenue decoupling, straight fixed variablerates, and rate stabilization) and/or via margin trackers (e.g., lost revenue adjustment mechanismsor LRAMs). These mechanisms are discussed in more details in the following sections. Figure 11presents a summary of cost recovery methods.

Figure 11

Direct Program Cost Recovery

Direct cost recovery allows utilities to pass through efficiency costs to customers in one of threeways: 1) Program costs are treated as expenses that are embedded in base rates (or the chargeper Therm) in a general rate case. 2) Efficiency program costs are recovered via a separate tariffrider or a surcharge on customer bills (also known as system benefits charge), and the surchargeamount may be adjusted periodically to correct for over or under-recovery of efficiency costs. 3)Program expenditures accrue and are tracked in a balancing account for amortization and laterrecovery from customers over a period of time.

ENERGY EFFICIENCY PROGRAM COST RECOVERY

MARGIN COSTS

BASE RATE TRACKER DEFERRAL ACCOUNT

Tariff Rider Bill Surcharge

DIRECT COSTS

BASE RATE

(DEFERRED)

MARGIN TRACKER

(PERIODIC ADJUSTMENTS)

Revenue Decoupling

Mechanism

Straight Fixed

Variable Rates

Lost Revenue

Adjustment

Mechanisms

Revenue Stabilization

Mechanisms




According to survey respondents, special tariffs or efficiency riders are currently the most commonmethod for recovering program costs. Fifty-seven companies in 27 states use a special efficiencyor conservation tariff rider, 33 utilities in 20 states embed natural gas efficiency program costs inbase rates, and 21 companies in eleven states apply a mandated system benefits (or public goods)surcharge to customer bills (see Figure 12). Eight other companies in seven states use othermethods to recover program costs (e.g., an approved tariff accrual and amortization balancing

account, gains from an asset management agreement program).

Figure 12

0

10

20

30

40

50

60

Special Tari ff or Rider Base Rate Recovery System Benef itsCharge

Other Methods

57

33

21

8

R e p o r t i n g U t i l i t i e s

Regulator-Approved Gas Efficiency Direct Program Cost Recovery Mechanisms106 Programs in the United States

Gas Eff iciency Regulatory Treatment

in 27 states

in 20 states

in 11 states

in 7 states

Lost Margin Recovery

Recovery of margin losses and revenue shortfalls due to efficiency program implementation areincreasingly allowed in more states, thereby removing the disincentive to invest in natural gasefficiency programs due to falling revenues. Sixty-two programs operate in the 30 states identified

earlier as having authorized a mechanism for recovering lost margins correlating to efficiencyimplementation. Additionally, decisions on lost margin recovery are pending for five other utilitiesin five states. On the other hand, 32 respondents reported that they are not allowed to recover therevenue losses resulting from implementing efficiency programs. Methods for recoveringefficiency-related lost margins vary.

Non-volumetric rate structures form one method of recovering lost margins. With such ratedesigns, utilities may collect revenues from customers independent of Therm usage. Here marginrecovery is not applied on a per Therm basis but approximates a per-customer basis. Thesemechanisms include revenue decoupling, straight fixed variable (or SFV) rates, and rate stabilizedmechanisms.




Lost revenue adjustment mechanism or LRAM is the other method of recovering lost margins.It requires the utility to identify unrecovered margins associated with efficiency programming, trackthem over a time period, and recover them after the fact. In this case revenues continue to berecovered on a Therm usage basis; however, rates are adjusted to correct for under- or over-recovery of margins. This type of margin true up is also generically referred to as conservation

adjustment mechanism.

As shown in figure 13, of the sixty-one utilities that are allowed to recover lost margins in the U.S.,thirty-six utilities (in 21 states) have a non-volumetric rate design, twenty (in 13 states) use a lostrevenue adjustment mechanism (LRAM), four (in three states) have both non-volumetric rates anda margin tracker, and one uses another method to recover lost margins. Of the 24 utilities thathave a LRAM or margin tracker, four indicated that their margin adjustments are capped or limitedto a certain percentage of revenues: The cap was placed at two percent of revenues for oneresponding company. (The 24 utilities include the four listed as having both margin tracker andnon-volumetric rates.)

Figure 13

Non-VolumetricRate Design (36)

Lost RevenueAdjustment

Mechanism (20)

Both Non-Volumetric Rates

and LRAM (4)

Other (1)

Approved Mechanisms for Recovering Lost Margins(61 Utilities in 30 States)

Gas Efficiency Regulatory Treatment

33%59%

7%

2%

Revenue decoupling mechanisms have different names, such as conservation enabling tariff,conservation incentive program, conservation margin tracker, conservation rider, and so on.Decoupling breaks the link between utility revenues or profits and gas throughput (or deliveredvolumes). It may be applied to total revenues or on a revenue-per-customer basis. When therecovered revenue varies from the allowed recovery amount, it is trued up via periodic rateadjustments to adjust the under or over-recovery. Revenue variances specific to efficiency may betracked in a separate balancing or adjustment account and applied to the next rate adjustment.Decoupling takes on different forms: 1) full revenue decoupling, 2) partial revenue decouplingwhere only a portion of losses are recovered, and 3) revenue decoupling with certain restrictions(see below).




In some cases, the margin shortfall or surplus, specific to efficiency investments, is allowed toaccrue in a deferral account, treated as a regulatory asset, and the recovery is amortized over aperiod of time, normally applied to the class of customers benefiting from efficiency savings.Sometimes utilities may charge an annual interest rate on the unamortized balances, thusrecovering the carrying cost on the deferred margins.

Partial revenue decoupling limits margin recovery to a specific percentage of revenues or mustbe equal to the achieved natural gas cost saving. Revenue decoupling with restrictions mayinvolve caps on the authorized ROE or other limits on regulated earnings.

A revenue stabilization mechanism (also known as rate stabilization) is another form of non-volumetric rates, where utility revenues are de-linked from the amount of gas throughput. Ratestabilization combines lost margin recovery and recovery of operating costs within one mechanism.Here rates are adjusted periodically to adjust for variances in returns from the regulator-authorizedreturn on equity (ROE) and for utility cost variances since the last rate adjustment.

With straight fixed variable rates, there are no revenue impacts resulting from efficiency

programming, because most or all fixed costs are recovered via a non-volumetric charge. The per-customer charge remains stable regardless of consumption variances (approximating a flatmonthly fee).

Of the forty utilities in the thirty states that have non-volumetric rate design, 18 (in 13 states) havefull revenue decoupling, three (in three states) have partial revenue decoupling, nine (in sevenstates) have revenue decoupling with restrictions, seven (in four states) have a non-specified typeof revenue decoupling, two (in two states) have a straight fixed variable (SFV) rate design, and onehas a rate stabilization mechanism. (The 40 utilities include the four that have both non-volumetricrates and margin trackers.) Revenue recovery in the form of a decoupling mechanism is pendingfor four utilities in three states.

Table 28

NON‐VOLUMETRIC RATE STRUCTURES 40 NATURAL GAS UTILITIES IN 30 STATES

1

MECHANISM NUMBER OF COMPANIES NUMBER OF STATES2

Full Revenue Decoupling 18 13

Partial Revenue Decoupling 3 3

Revenue Decoupling with Restrictions 9 7

Non‐Specified Revenue Decoupling 7 4

Straight Fixed Variable 2 2

Rate Stabilization Mechanism 1 1

1The forty natural gas utilities include four that have both revenue decoupling and a margin tracker(or lost revenue adjustment mechanism).

2The same state may be represented in more than one category of non-volumetric mechanism




As seen in Figure 14, in 2010 natural gas efficiency programs are found in all states that allow theutility to segregate margin recovery from its natural gas throughput or delivered volumes.13

Figure 14

STATES WITH NATURAL GAS EFFICIENCY PROGRAMS AND REVENUE DECOUPLING – 2010 YEAR

Data Sources: AGA Fact Sheet: Decoupling and Natural Gas Utilities, August 2010, http://www.aga.org/our-issues/RatesRegulatoryIssues/ratesregpolicy/Issues/Decoupling/Documents/2010AugAGADecouplingFactSheet.pdf; 2011 AGA Natural Gas Efficiency Programs Survey

Utility Performance-Based Incentives

As mentioned earlier, recovery of efficiency program costs and associated lost margins removesthe utility’s disincentive to promote energy efficiency, thereby making program implementationrevenue neutral. To incentivize investor-owned utilities to commit fully to efficiency programimprovements and expenditures, regulators have gradually approved more mechanisms thatfinancially reward utilities for making energy efficiency investments. Efficiency performance-basedincentives for utilities involve three mechanisms: shared savings, performance targets and rate ofreturn incentives.

Shared savings mechanisms reward utilities either for investing in energy efficiency at pre-determined minimum spending levels or for making cost-effective efficiency investments. Financialincentives are calculated as a percentage of efficiency spending or as a percentage of theachieved net system benefits (the difference between efficiency costs and energy savings or other

13For an update on revenue decoupling and other rate designs per states, see Innovative Rates, Non-Volumetric Rates, and Tracking Mechanisms, AGA Presentation Slide Deck (July 2011), http://www.aga.org/our-issues/RatesRegulatoryIssues/ratesregpolicy/Pages/febr2011-innovative-ratesNon-volumetric-ratesandtrackingmechanisms.aspx




economic benefits). Awards are often capped at a specified dollar amount regardless of the rateapplied to spending levels or net benefits. Commonly investors and ratepayers share the savings.In some cases, penalties are applied when programs fail to meet the minimum threshold.

Performance targets are often conditions for capturing earnings on efficiency investments. Thepre-determined goals may be set at certain investment levels, total energy savings, the extent of

cost-effective savings, or the numbers of units installed. Financial awards may be tiered accordingto performance thresholds: for example, for attaining at least a proportion of goals, meeting thetarget, or exceeding them. Also penalties may apply if the utility falls short of the minimumrequirements. Also incentives may be capped, even if performance surpasses the maximumthreshold and may involve a dead band, where incentives are suspended within this performancerange.

Rate of return incentives allow earnings on natural gas efficiency expenditures either equal to theutility’s authorized return on equity (ROE) or at an enhanced level—an added or bonus ROEapplied to efficiency investments. Incentive structures may involve a combination of these threemechanisms, making performance targets a prerequisite to shared savings or returns on efficiencyinvestments.

Thirty-eight natural gas efficiency programs are implemented in the 15 states identified earlier ashaving utility performance based incentives. When asked to identify all mechanisms that formedtheir incentives, they indicated having one of the following mechanisms: 14 companies (in sevenstates) have a shared saving mechanism, six (in three states) have a rate of return (ROR)mechanism, and 18 companies (in four states) have performance targets. Many have more thanone incentive mechanism. Table 28 shows the various arrangements as reported by companies.

Table 28

UTILITY FINANCIAL INCENTIVE STRUCTURES SPECIFIC TO

NATURAL GAS EFFICIENCY PROGRAM IMPLEMENTATION AND PERFORMANCE

FINANCIAL INCENTIVE MECHANISMS PROGRAMS STATES1

Shared Savings 8 3

Shared Savings and Performance Targets 5 4

Shared Savings and Other Mechanisms 1 1

Rate of Return Incentive 3 2

Rate of Return Incentive and Performance Targets 3 2

Performance Target and Other Incentives 18 9

1The same state may be represented in more than one incentive category

According to twelve survey companies, they are eligible to share between -12 percent and 33percent of ratepayer savings (the median share was 15 percent). Of the six companies that have arate of return incentive, five earn an ROR on natural gas efficiency investments equal to itsauthorized return on equity (ROE), and one earns a rate greater than the authorized ROE.




Low Income Program Requirements

Specific to the low income customer segment, 75 of 108 respondents (in 29 states) indicated thatthey are mandated (via ruling or legislation) to fund natural gas efficiency programs for thiscustomer segment. In all 29 states (74 of the 75 programs), the program administrator is requiredto use one or more regulator-picked cost-benefit tests to measure program performance. This

calculation must be based on net savings for 55 percent of programs (44 of 81), on gross savingsfor 38 percent (or 31 programs), and on both net and gross for two percent (or two programs).

While nearly all these low income programs are required to calculate cost effectiveness, only 41 of75 (in 24 states) are required to pass these mandatory tests in order to qualify for program costrecovery. Thus more than 45 percent of programs are able to recover low income program costs,regardless of their cost effectiveness status—perhaps because there is an acknowledgment insuch cases of the wider societal benefits and a recognition that low income programs tend to beless cost-effective than mainstream efficiency programs.

Fuel Switching Allowances

Sixteen percent of U.S. respondents (17 of 107) reported that their regulator-approved natural gasefficiency program encourages fuel switching through financial incentives (e.g., rebates, loans andother benefits) to customers who install natural gas equipment in new homes, convert to naturalgas from other fuels, or replace old equipment with new higher-efficiency natural gas equipment.

Green House Gas or Carbon Emissions Targets and Credits

If their utility operated within a state that targets greenhouse gas (GHG) or carbon emissions as anexplicit and measureable reduction goal, respondents were asked whether their programs earnedcredit via a regulator-approved mechanism. These programs include renewable energy certificate

purchase programs and carbon offset purchase programs that support wind farms and biogasgenerating plants. Four programs (in three states) indicated that the utility was able to recoverprogram costs, two (in one state) earn a rate of return on their program investment, and oneprogram in a fifth state has both regulator-approved cost recovery and return on investment.Similar programs are pending in two other states.

When asked whether they had sought regulatory approval for cost recovery or earnings on projectinvestments where GHG emissions reduction is the primary goal, five of 91 respondents (in fivestates) indicated that they had secured regulatory approval, and two (in two states) wereunsuccessful. Eleven companies (in eight states) are exploring such options.




V. THOUGHTS AND COMMENTS

Program administrators were asked to share their experiences with implementing natural gasefficiency programs. The following is an anecdotal account based on respondent observationsregarding lessons learned, program delivery barriers, market penetration, and the most successfuland innovative program features.

Delivery Barriers and Lessons Learned

The persistent economic downturn and slow recovery continued to pose a challenge for manynatural gas efficiency programs in 2010, particularly in the hardest hit areas, thus slowingmomentum in program delivery and market penetration. Shrinking resources again preventedcustomers from taking advantage of appliance rebates and other financial incentives for improvingenergy efficiency. Particularly in rural areas, it was difficult to attain robust participation levels inresidential programs as was the case in other areas with low housing stocks. Some businessprescriptive programs were very slow as well, perhaps because many businesses once moreelected to extend the life of their existing equipment, or opting to lease equipment, rather than

invest in higher efficiency systems.

While some rebate programs got off to a slow start and ramped up after a push from advertising, anumber of programs were faced with unexpected high popularity of their efficient appliance rebatesand other incentive programs. Federal tax credits were cited as positively impacting customerparticipation. In some newer programs, customer acceptance started stronger than initiallyanticipated. While at first glance, strong interest appears to be a positive outcome, it can beproblematic if program implementers are caught off-guard. With equipment rebate programs beingdriven by the market, it is often challenging for program managers to forecast participation and tomanage program budgets so as to maintain steady program offerings throughout the year.Regardless, it is important to begin imparting information about available funding at the beginningof each program year and to make certain that customers have access to this information at all

times. It is also important to leave room under budget caps for unforeseen expenditures in alaunch year.

Respondents suggested that customers are interested in being green if there are incentives toassist them in paying for upgrades. In many markets, residential customers responded favorablyto subsidized, low-cost diagnostic or computer energy audits in conjunction with specific efficiencyrebates such as attic and wall insulation and air sealing. One national market research surveysuggests that such measures are in demand. However, the in-home energy audit as pre-requisiteto qualifying for rebates was counter-productive to garnering customer interest and rather createdskepticism toward the program and suspicion among some customers.

Many expressed a concern regarding program costs and the difficulty of achieving cost

effectiveness, particularly for companies with a small customer base. This concern is expected tocontinue if natural gas costs continue to settle, which might lower the cost effectiveness thresholdand possibly limit the types of measures that are deemed cost effective in the near future. Someare taking a proactive approach by attempting to streamline program costs and opting toconsolidate program delivery with a single vendor. Another difficulty in program implementationand evaluation has to do with separating savings specific to heating equipment replacements fromthose linked to other retrofit measures.

Others were faced with the unintended consequences of changing their product brand. Oneprogram rebranded its efficiency product to comply with a wider effort and began delivering under anew program name. The lack of name recognition caused much confusion and lost interest, whichrequired much direct marketing to regain customers’ attention.




Another unforeseen effect comes from multiple entities offering overlapping incentives within thesame service territory, such as the federal government and neighboring utilities, which can alsocause misunderstanding. Clear communications and a simplified application process can offsetsuch complications to the benefit of customers.

Care must also be taken when reaching out to customers in order to avoid an uninformed

consumer response. In one case, an ill-informed blogger suggested that the utility’s efficiencyincentive program was a scam. As a result the program administrators invested considerable effortto re-educate consumers and neutralize the negative effect on customer perceptions. Also thisprogram now works more closely with local municipalities before launching a new program in atarget area.

Other market hurdles have to do with the lack of new energy efficient gas technologies which limitnew program opportunities. Another issue is the low stock of high efficiency gas appliances inmany markets’ white goods and box stores and the practice of relegating such high efficiencyappliances to special order status. Managing vendors in a market transformation environment isyet another challenge. Program administrators find themselves trying to balance between vendors’rising expectations regarding program funding and adherence to approved budget guidelines. And

then there is the shortage of auditors and contractors in many areas that qualify for efficiencyinstallations.

Having a strong alliance with trade partners goes a long way toward clearing such market hurdles.Trade allies (such as HVAC contractors, energy auditors, plumbers, and equipment dealers andretailers) are vital to the successful implementation of efficiency programs. Sustained contact withthese business partners not only improves program marketing but also the likelihood that high-efficiency natural gas equipment will be regularly stocked rather than special ordered.

Efficiency programs are also contractor-driven, and thus it is crucial to develop networks of trainedlocal contractors that are incentivized and aware of program offerings and have the expertise tocomplete quality installations. Quality technical training is essential to optimizing efficiency

installations and promulgating safety standards. Good relationships with vendors allow programadministrators to monitor their advertising practices and safeguard the accuracy of theirmessaging, thereby ensuring that they positively represent the utility.

Other respondents expressed the need for better marketing and outreach and to explore incentivesfor commercial or institutional customers. They have also suggested that where traditionalmarketing techniques are less successful in certain jurisdictions, community-based approacheshave achieved good results. Based on lessons learned, here are other best practice trips sharedby respondents:

• Customers rely on their utility to provide unbiased solutions and advise to meet their energyneeds. They demand energy-based, rather than fuel-based, efficiency solutions. Through

this strategy customer needs are met, results optimized, and program efficiencies realized.

• Aim for simplicity in program design: simple but meaningful.

• Steer away from programs that may be perceived as competitive in nature.

• Establish program assumptions and budgets prior to implementation, thus creating a stableoperating environment for the utility and certainty of program availability in the market.

• Ensure that programs are developed to meet the needs of all customer classes.

• The utility has a direct relationship with their customers and knows the market in which itoperates. Program implementers should have the flexibility to be responsive to customerneeds and promptly adapt to market changes—that is, they should be able to alter program




features within the program implementation year by for example adding new programs ortechnology offerings. For example, energy efficiency “landscape” was transformed with theinflux of ARRA funds and will continue to change as funds are depleted.

• As measures are added to a program, cross reference to other programs to ensureconsistency and ascertain that program rules are enforceable and measurable (e.g., pre-

and post blower door testing for residential programs.• Engage business partners at the very onset of program implementation.

• Develop relationships with trade allies and make the most of their capabilities. Thefollowing steps can help achieve this:

maintain a close working relationship with trade allies (e.g., warm calling aftermailers can be very effective)

collaborate with contractors and vendors to deliver your message to a wideraudience

meet regularly with contractors

offer in-house training and other resources that support them in selling your program• Develop partnerships with all stakeholders. Utility collaborations can be very effective in

streamlining implementation and lowering costs. Also maintain frequent contact withregulatory energy program staff, trade allies and customers.

• Marketing, advertising and outreach are critical for the program to gain momentum. Theneed for strategic messaging is very important. Customize and target messaging to suit thediverse markets in which the utility operates, but keep it as simple as possible.

• The need for proper promotion of incentive offerings is even more critical in an environmentwhere other utility funded programs overlap the program’s service territory.

• Enhance program offerings for limited income customers. Higher incentives are required to

enable them to install measures. Also set the poverty level requirement based on yourparticular low income customer base and make sure that funding levels are adequate perqualified customer. Leverage other funding and the expertise of community actionagencies.

Market Penetration

Respondents were asked to assess the degree by which customers recognized and tookadvantage of their ratepayer funded natural gas efficiency programs. They were asked to estimatemarket penetration as the proportion of program participants to the potential market. Thenumerator in this ratio may represent the number of customer enrollments, processed rebates oronline tool sign-ups and the denominator may represent the number of eligible customers or

general service or firm gas customer base. Some respondents were uncertain regarding programadoption, either because programs were either too new or because data were not available.

Forty programs provided either quantitative or qualitative answers, indicating that market saturationvaried by program age, customer segment and program type. Based on 30 of 42 responses to thisquestion, the median market penetration for natural gas efficiency programs was 2.5 percent.Saturation rates ranged from 0.1 percent to 48 percent.




Ten programs had a market share of less than one percent, twelve had from one to less than fivepercent, four achieved five to less than 10 percent, two reached ten to less than 15 percent, andtwo captured at least 25 percent of the potential market (see Table 29). The lower penetrationrates generally correlated with newer programs.

Table 29

EFFICIENCY PROGRAM MARKET PENETRATION 30 PROGRAMS

MARKET PENETRATION PROGRAMS PERCENTAGE

Less than 1% 10 33%

1% ≥ < 5% 12 40%

5% ≥ < 10% 4 13%

10% ≥ < 15% 2 7%

15% ≥ < 20% 0 0%

20% ≥ < 25% 0 0%

25% and greater 2 7%

Some programs were constrained by the annual funding caps and one-year implementation cyclesin achieving long-term strategic market growth. Others indicated that they were becomingincreasingly inhibited by the proliferation of electric heat pumps and limitations in promotingconservation only to dwellings where the primary heating source is natural gas. However, theseprograms are exploring innovative conservation technologies such as natural gas heat pumpswhich may improve delivery of Therm savings to customers.

Most Successful Attributes

When asked about their most successful program attributes, respondents focused on specificimplementation approaches, individual program components and program results. Here is a listingof the most successful attributes of surveyed programs, beginning with the most cited aspects:

Partnerships with Other Stakeholders: Strong trade alliances are fostered in many programsthrough outreach, education, incentives, training, and shared goals. Many find that contractors,when educated about natural gas efficiency and its benefits to their businesses, are the mosteffective resource to inform and persuade customers to take advantage of rebates and other

financial incentives.

As mentioned earlier in this report, many programs benefit from joining forces with other utilities inadjacent or overlapping service territories, in many instances combining or matching natural gas,electric and water saving measures, thereby reducing administrative costs, improving processefficiency, and benefiting customers through more comprehensive program offerings andenhanced financial incentives. Also successful are multi-utility collaboratives, such as theGasNetworks partnership, which offers nationally-recognized, comprehensive and consistentmarket transformation programs to customers throughout Massachusetts, New Hampshire andRhode Island.




Involvement in community-level grassroots conservation efforts has also been productive—particularly coalitions with community action agencies that deliver home heating assistance andweatherization services to low-income households. Such ties help to leverage utility low-incomeenergy efficiency program dollars with federal low-income heating assistance program (LIHEAP)funds, Department of Energy weatherization assistance funds, and utility customer assistanceprogram funds. This presents a win-win for customer and utility, as it helps minimize utility bill

payment arrears and write-offs and thus reduces the utility’s uncollectible expenses.

Low-Income Usage Programs: As just mentioned, low-income weatherization programs providemany economic and societal benefits, including customer comfort, safety, and cost savings for boththe utility and its customer base. For many programs, the low-income weatherization component isthe most successful in achieving high energy savings and cost-effectiveness. Another way ofcoordinating among programs is when higher usage customers are identified via the customerassistance program and those most in need are provided with furnace repairs or replacements.

Commercial and Residential Rebates and Incentives: Without direct rebates and other financialincentives, such as efficiency project subsidies and efficiency financing, many customers would be

reluctant to move forward with efficiency improvements, particularly in the lingering economicclimate. Many programs reported a steady growth in residential high-efficiency equipment rebateprograms. In some cases, enrollments doubled in 2010 from prior year (e.g., Energy Star Homeprograms). In other newly launched programs, the level of interest in the residential HVACreplacement program was not well-anticipated by program administrators, and some programseven exceeded their targets.

Residential and Commercial Audits and Customized Retrofits of Large Facilities: Home andbusiness energy audits provide an educational opportunity for customers to learn about energyefficiency, improved natural gas efficiency measures, and cost savings through lower bills. Manyprograms offer free or low cost energy audits to encourage a whole house approach to energyefficiency. Audit information gives business customers, for example, the opportunity to create anenergy plan that incorporates recommendations from the technical assessment and seek approvalfor initiating energy efficiency improvements. Some credit small business outreach programs forimproving market penetration.

Other Success Factors: The obvious success metric is meeting or exceeding state-mandatedprogram savings goals, which happily many respondents reported. Elements that are important tothe outcome of natural gas efficiency programs include expedited program startup and a renewedability to market the natural gas advantage, through multi-media marketing, such as web-basedapplications, brochures and TV and radio advertising. Also vital to the success of a program isclear regulator support as evidenced through approved program cost recovery, lost revenuerecovery, and possible performance bonuses for meeting or exceeding program goals. The

following success elements and metrics were also mentioned:

• Comprehensive portfolios accessible to all segments in the customer base—offeringsomething for everyone and an ability to cover 90 to 100 percent of natural gas end uses.

• A significant focus on community education and outreach is necessary for driving programparticipation and general conservation awareness among customers. This involvesreaching customers through environmental organizations, local community groups,stakeholder and partner organizations, and even schools. A strong focus on face-to-faceinteractions with customers is also important to program success.

• Testing different approaches to increasing awareness and building support for efficiency.




• Ability to conduct outreach via multi-media platforms, including of web based tools, and andability to leverage trade allies within service franchise.

• A positive perception among customers and regulators of efficiency programs, and ensuringthat vendors relay accurate information and fact-based advertising.

• Ensuring customer satisfaction with the programs, and forming customer-utility partnerships

to promote energy efficiency. Customer recognition (particularly in commercial andindustrial programs) that the utility is there to help their business save resources during thisprotracted economic recession.

• Strong participation in rebate programs for efficiency measures, as reported by many,particularly in:

High-efficiency space heating (having an excellent total resource cost performance)

Offering enhanced HVAC rebates

Residential 95% AFUE condensing furnace rebate program was by far the mostsuccessful measure in one portfolio

Attic insulation• Growth in program recognition, identifying customer response 'triggers' and making them

available for program delivery in 2011

• Ability to show energy savings to the customer’s bill and depict years to payback.

• Streamlined and simple process for participants and trade allies: Ease of programimplementation, customer-friendly programs, a simple rebate process, and quickturnaround of customer reimbursements by the utility. Examples of this include:

• high-quality, third-party multi utility-sponsored incentive processing program (e.g., EFIrebate processing)

• funding of programs that are run by the regulator or community action agencies who are

well-equipped in reaching low income customers

• Refunding community action agencies (CAAs) based on total job cost rather than on a per-installed measure basis

• Integration with electric programs, reduced administrative costs, and improved jointcustomer satisfaction

• Robust alliances with trade partners and program management contractors, helping theutility to better coordinate program components and optimize results. Also rewarding arewell-developed trade ally networks that can be leveraged across fuels and funding sources.

• Active involvement by HVAC contractors in utility’s service territory.

• Hiring, training and employing in-house Building Performance Institute (BPI) certified homeenergy auditors

• Low administrative costs coupled with high energy and cost savings

• Prioritizing highest consumption savings measures

• Calculating energy savings using deemed savings

• Overall commitment to program growth and adaptability

• Leveraging of statewide efficiency programs with complementary products and enhancedincentives.




Successful Programs and Products: Specific products and program activities were mentionedas most successful. These include:

• Low income program continues to generate high savings by significantly loweringconsumption within this traditionally high energy-usage customer segment. Positiveattributes of these programs include:

measures of success include the increased safety and comfort of residents weatherization is delivered by community action and other state agencies, lowering

program implementation costs and increasing participation

averaging a 24 percent in natural gas consumption per residence (reported in onecase)

• Programs that assist moderate income residential customers that are not eligible for freeweatherization

• Strong residential new construction program reported as key to the overall performance ofthe efficiency programs.

• Residential retrofit and equipment replacement program cash incentives coupled with low

interest financing.

• Air sealing programs for multi-family market (2 to 8 units)

• Residential consumer products and Energy Star Home programs (reported to have doubledin 2010 due to an upturn in the local economy).

• Home and small business energy audits, providing an opportunity for customers to learnabout energy efficiency and how improved gas measures can save energy and lower bills.For example, Home Performance Solutions energy audits were reported by one program tohave exceeded the three-year program goal in year 2 of program implementation due toaccelerated ramp up.

• Cost-effectiveness of multi-family direct install program

• Solid demand for business custom programs

• Financial enablers are in place to continue to motivate and drive excellence in DSMperformance.

Most Innovative Features

Respondents were asked to share the most innovative features of their natural gas efficiencyprogram. Many of the most successful attributes discussed above were highlighted as mostinnovative. These include strategic partnerships, a whole home or project approach to efficiency,targeted marketing and education campaigns, and new technologies. Specific program

components were also featured in the comments submitted for 41 efficiency programs. Of course,what is innovative in one program might be a regular feature in other more mature programs.

Strategic Partnerships – Various collaborations were touted as both innovative and successful,including those between two neighboring utilities (e.g., gas, electric or water), multi-utilitycollaboratives, partnering with business on strategic program design and delivery, leveragingfunds, and jointly promoting energy efficiency green products with non-energy institutions. Forexample,

• Four natural gas utilities joined forces to build a comprehensive energy efficiency programthat benefits all their customers. This achieves considerable dollar savings relative to




developing separate programs, which can be passed along to customers through enhancedfinancial incentives.

• The GasNetworks collaborative is another example of several utilities across three states.

• Joint programs with electric utilities within the same service territory, reported by several asreducing costs and providing multi-fuel efficiency offerings. Integrating with electric

efficiency programs provides a one-stop shop for customers. In one case, a joint highefficiency natural gas furnace with electronically commutated motor (or ECM) program, thecustomer receives a rebate of $400 for the installation of an electrically efficient natural gasfurnace, where the rebate funding is split between the gas utility and the electric utility.

Energy Assessments and a Whole House or Project Approach to Efficiency – Home audits,particularly when coupled with a comprehensive view of efficiency, yield very favorable results.Several programs reported a whole project or system approach to efficiency and a thorough cost-effectiveness assessment of proposed measures. Some programs require a home energy audit toidentify energy savings opportunities in the home or building shell. Others maintain contact withcustomers after diagnostics to encourage them to proceed with recommended seal-ups and

connect them with BPI-accredited contractors qualified to carry out Tier III seal-ups. Otherprograms condition substantial furnace and other equipment rebates on completing free energyaudits, again with the goal of shifting customers to a whole house approach. Other programsprovide larger incentives to higher use residential customers to help them achieve the type ofsavings traditionally seen in low-income customer weatherization programs. Still others subsidizea portion of the recommended measures, including insulation and air duct sealing.

Targeted Marketing and Education – Many program administrators find conservation education,outreach and targeted marketing to be the most cost-effective tools in achieving energy savings.Some programs have comprehensive school education programs. Others target customersdirectly via natural gas usage letters that teach conservation and ways to lower energy bills, energyanalyzer tools, and complimentary energy conservation kits, often customized for specific markets.

Some disseminate energy efficiency information through the local media, and others target tradeallies with dealer spiffs incenting them to promote natural gas efficient appliances. Here are a fewother examples of innovative and successful means for pro-conservation messaging:

• Fun and effective elementary school education program, reaching 5,000 fifth graders andachieving significant Therm savings (indirect outreach to parents). Other educationprograms, directed at sixth graders, were reported as very successful.

• EnergySMART Activity and Essay contest throughout the service territory, educating thirdgraders about the importance of energy conservation and efficiency. This initiative focusedon changing household behavior through children and encouraging parental support forsuch activities.

• As part of a School Direct Outreach program, an interactive Energy Education Mobile,travels to schools across a Canadian province, educating students and the public about theprovince’s energy landscape and the benefits of energy efficiency in the home.

• Customer Take Control of Your Natural Gas Bill dashboard. This program offers an on-lineresource that allows customers to determine the reasons behind higher or lowered naturalgas bills. On some sites, customers are able to easily navigate to statewide efficiencyprogram sites where more efficiency education is available.

• Neighborhood Energy Savings Outreach Program used a targeted approach and hastenedprogram ramp up.




New Technologies and Alternative Measures – Many program administrators identified newnatural gas efficiency technologies as key to growing their programs. A few have been able toincorporate research and development of new and alternative technologies into their energyefficiency programs. A few others are allowed to pilot new technologies within their space andwater heating programs, which if successful, will enable them to transfer many custom orinnovative features over to mainstream programs (e.g., tankless water heaters). While not

necessarily emerging technologies, a few alternative programs were cited:

• Adding smart low-flow showerheads to program measures. Showerhead has a low flowrate and thermal actuated valve to slow hot water flow to a trickle until the bypass valve ispulled, thus reducing wasted hot water and thus saving both natural gas and water.

• Pre-rinse spray valve direct install program for small commercial customers, providing themwith energy savings and enabling the program implementer to survey their natural gasappliances while on site.

• Tiered rebates for residential and commercial customers, promoting the adoption of higherefficiency in natural gas appliances.

Other Innovative Features – Programs also featured the following components as beneficial:

• A “Green Saver Tariff,” whereby customers receive a $2 credit on gas bills for 24 months, ifthey participate in the Home Performance with Energy Star program and either 1) install allrecommended efficiency retrofits, or 2) purchase/build a green home with a minimum 3-starrating that houses at least three gas appliances.

• Involvement of local HVAC contractors in program delivery. For instance, throughcontinuous outreach to contractors through in-person contacts, newsletters and seminars,one program was able to engage over a thousand contractors and trade partners inpromoting rebate programs, which led to a significant jump in customer participation.Another example is Comfort System Analysis training program for HVAC contractors.

• Brand building and customer engagement through increased face-to-face consultation andprogram delivery with the purpose of increasing the likelihood of returning clients.

• Funding gauges added to program website to allow customers to keep track of remainingavailable funds.

• Transition of residential HVAC program to online application processing and electronicverification of data eligibility.

• Move toward instant application processing in residential programs at the point of purchaseor contact with a trade ally.

• Customer account managers proactively working with C & I customers on new energy

efficient improvements (e.g., HVAC, appliances and shell measures). In many newer largecustomer programs, a “hold-your-hand” approach is adopted throughout the process,resulting in more completed projects with larger savings, benefiting customer and utility.Some programs use a Shared Savings program to fund energy efficiency improvements forcommercial and industrial customers.

• Fuel conversion from propane to natural gas: while the regulator in this example typicallydoes not support fuel switching, they approved this program for low income propanecustomers.

• Requirement to accept Home Performance with Energy Star audit to access incrementalrebate and have BPI certified auditors in-house (on staff) to perform. Although the homeassessment posed a hurdle for some customers, once completed, it provided customers




with essential information on their home’s efficiency and on available options for improvingefficiency levels.

• Subsidizing a portion of the recommended efficiency installations that were adoptedthrough the home audit programs, including insulation and air duct sealing.

• Energy savings calculated off a customer’s utility rate

• Use of an annual balancing adjustment to true up program

• Internally developed cost-effectiveness model, and customized performance-trackingsystems.

• Rebates specific to moderate income customers that do not meet the poverty threshold toqualify for more traditional low- and no-cost weatherization and efficiency programs.

• As a part of the efficiency program, funds are available to replace customer-owned gasyard lines.

• A comprehensive portfolio and an ample selection of high efficiency appliances



Natural Gas Efficiency Programs Report – 2010 Program Year, Page

APPENDIX A – STATE ENERGY EFFICIENCY PROGRAM PROVISIONS AND PRACTICES

STATEActive

EE Program(s)

EE Market

Potential Studies

Utility Funding

Requirement

Low-Income EE

Requirement

Program

Cost Recovery

Lost Margin

Recovery

Performance-

Based Incentives

Fuel

Switching

Full Cycle EE

Measurement

EM&V Re

Requir

AL

AK

AR ● ● ● ● ● ●

AZ ● ● ● ● ● ●

CA ● ● ● ● ● ● ● ● ●

CO ● ● ● ● ● ● ● ● ● ●

CT ● ● ● ● ● ● ●

DC

DE

FL ● ● ● ● ● ● ● ● ●

GA

HI

IA ● ● ● ● ● ●

ID ● ● ● ● ● ●

IL ● ● ● ● ● ● ●

IN ● ● ● ● ● ● ●

KS

KY ● ● ● ● ● ● ●

LA

MA ● ● ● ● ● ● ● ● ●

MD ● ● ● ● ● ●

ME ● ● ● ● ●

MI ● ● ● ● ● ● ● ●

MN ● ● ● ● ● ● ● ● ●

MO ● ● ● ● ● ●

MS

MT ● ● ● ●

NC ● ● ● ●

ND ● ● ● ●

NE

NH ● ● ● ● ● ● ● ●

NJ ● ● ● ● ● ● ● ● ●

NM ● ● ● ● ● ● ●

NV ● ● ● ● ● ●

NY ● ● ● ● ● ● ● ● ● ●

OH ● ● ● ● ● ● ●

OK

OR ● ● ● ● ● ● ●

PA ● ● ● ● ● ● ● ●

RI ● ● ● ● ● ●

SC ● ● ● ●

SD ● ● ● ●

TN ● ● ● ●

TX ● ● ●

UT ● ● ● ● ● ●

VA ● ● ● ● ● ● ● ●

VT ● ● ● ● ● ● ●

WA ● ● ● ● ● ● ● ● ●

WI ● ● ● ● ● ● ●

WV

WY ● ● ● ●

Canada ● ● ● ● ● ● ●

States 40 21 28 29 39 30 15 11 6 39

● In place as of 2010 ● Pending regulatory approval as of 2010




APPENDIX B – NATURAL GAS EFFICIENCY PROGRAM 2010 EXPENDITURES AND 2011 BUDGETS BY STATE

STATE

A. RESIDENTIAL B. LOW INCOME C. COMMERCIAL D. INDUSTRIAL E. OTHER F. EM&V PROGRAMS

2010Expenditures

2011Budget

2010Expenditures

2011Budget

2010Expenditures

2011Budget

2010Expenditures

2011Budget

2010Expenditures

2011Budget

2010Expenditures

2011Budget

2010Expenditures

ALABAMA $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

ALASKA $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

ARIZONA $1,216,877 $1,650,000 $487,579 $650,000 $270,790 $2,476,000 $0 $0 $127,847 $0 $112,279 $0 $2,215,372

ARKANSAS $1,514 ,088 $3,770,524 $0 $71,986 $479,380 $2,795 ,953 $278,540 $441,596 $191,549 $247,991 $14 ,447 $114,879 $2,478 ,004

CALIFORNIA $43,337,909 $53,670,742 $65,994,133 $68,183,471 $57,120,341 $57,572,151 $10,893,162 $28,639,821 $23,704,859 $55,404,699 $370,977 $4,576,333 $201,421,381 $

COLORADO $9,759,415 $6,924,710 $4,455,510 $4,929,580 $1,951,289 $3,333,519 $0 $0 $2,784,381 $2,940,487 $264,665 $853,518 $19,215,260

CONNECTICUT $5,013,647 $6,078,600 $2,808,250 $2,781,606 $3,417,292 $6,400,000 $0 $0 $387,300 $875,500 $100,647 $650,000 $11,727,136

DELAWARE $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

D.C. $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

FLORIDA $10,427,564 $12,670,835 $0 $0 $519,581 $703,974 $0 $0 $221,721 $109,020 $0 $150,000 $11,168,866

GEORGIA $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

IDAHO $1,057,334 $797,894 $208,361 $291,423 $356,726 $860,052 $0 $0 $318,052 $214,868 $50,346 $59,590 $1,990,819

ILLINOIS $18,058,149 $24,490,292 $1,030,966 $4,914,153 $3,741,767 $14,617,466 $0 $0 $2,235,962 $6,925,631 $434,875 $687,808 $25,501,719

INDIANA $6,748,556 $8,033,246 $1,373,225 $1,333,919 $1,055,468 $1,642,305 $0 $0 $1,791,559 $1,741,448 $425,974 $543,523 $11,394,782

IOWA $25,703,553 $24,082,083 $4,084,735 $5,296,626 $6,983,033 $8,664,975 $0 $0 $3,215,029 $3,312,775 $ 405,886 $540,000 $40,392,236

KANSAS $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

KENTUCKY $487,463 $1,358,291 $425,599 $727,883 $0 $0 $0 $0 $5,251 $20,326 $10,449 $10,000 $928,762

LOUSIANA $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

MAINE $546,468 $25,958 $61,221 $98,325 $400,160 $551,625 $0 $0 $0 $0 $0 $0 $1,007,849

MARYLAND $4,200,000 $4,900,000 $1,978,925 $1,290,000 $0 $0 $0 $0 $0 $0 $0 $0 $6,178,925

MASSACHUSETTS $38,566,199 $50,693,550 $14,094,916 $23,890,700 $17,740,888 $26,168,135 $0 $0 $0 $0 $1,210,066 $4,436,517 $71,612,069 $

MICHIGAN $15,519 ,033 $39,158,176 $13,718,725 $14,698 ,497 $5 ,100 ,653 $13,309 ,641 $0 $0 $4,612 ,211 $7,952 ,861 $2 ,139 ,832 $2,747,294 $41,090 ,454

MINNESOTA $16,363,332 $20,209,675 $4,235,008 $4,255,554 $7,877,464 $14,347,587 $4,442,563 $2,110,491 $3,433,131 $4,563,894 $31,641 $26,000 $36,383,139

MISSISSIPPI $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

MISSOURI $3,568,130 $3,452,982 $1,860,743 $1,876,500 $856,676 $995,476 $0 $0 $460,381 $514,270 $0 $220,000 $6,745,930

MONTANA $99,200 $170,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $99,200

NEBRASKA $15,190 $75,000 $0 $0 $4,326 $0 $0 $0 $0 $0 $210 $0 $19,726

NEVADA $1,739,634 $2,015,500 $606,478 $470,000 $139,062 $1,557,525 $0 $0 $2,293 $50,000 $21,189 $0 $2,508,656

NEW HAMPSHIRE $2,243,001 $2,791,135 $713,538 $840,895 $1,496,422 $3,498,976 $0 $0 $0 $0 $43,433 $124,540 $4,496,394

NEW JERSEY $67,362 ,190 $87,800,285 $19,140,085 $18,805 ,878 $37 ,838 ,227 $61,961 ,683 $0 $0 $1,349 ,770 $16,819 ,183 $92 ,106 $1,181,564 $125,782 ,378 $

NEW MEXICO $989,056 $1,055,968 $461,543 $1,378,483 $131,296 $846,122 $0 $0 $0 $0 $106,676 $125,760 $1,688,571

NEW YORK $22,567,958 $58,093,943 $5,187,007 $21,079,604 $6,159,941 $26,800,553 $433,913 $2,736,844 $4,259,730 $5,133,555 $704,968 $5,574,014 $39,313,516 $

NORTH CAROLINA $1,005,000 $1,145,000 $0 $50,000 $135,000 $0 $0 $0 $30,000 $0 $105,000 $80,000 $1,275,000

NORTH DAKOTA $141,286 $138,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $141,286

OHIO $11,654,115 $21,263,682 $18,927,694 $18,700,000 $750,581 $1,413,966 $0 $0 $369,750 $403,984 $265,000 $794,000 $31,967,140

OKLAHOMA $0 $830,309 $0 $0 $0 $304,374 $0 $0 $0 $0 $0 $0 $0

OREGON $11,347,158 $15,000,128 $2,349,176 $1,887,018 $7,504,556 $7,758,172 $1,251,950 $2,431,331 $0 $0 $ 477,730 $717,844 $22,930,570

PENNSYLVANIA $1,828,595 $3,258,000 $11,052,321 $17,442,053 $34,133 $28,000 $0 $0 $1,297 $861,990 $ 46,011 $50,000 $12,962,357

RHODE ISLAND $2,425,000 $2,335,000 $301,000 $983,000 $2,363,000 $2,852,000 $0 $0 $0 $0 $174 $199,000 $5,089,174

SOUTH CAROLINA $209,905 $135,000 $125,212 $150,000 $0 $0 $0 $0 $9,809 $50,000 $120 $15,000 $345,046

SOUTH DAKOTA $1,009,383 $1,088,097 $0 $0 $135,463 $174,187 $0 $0 $0 $0 $25,570 $0 $1,170,416

TENNESSEE $46,700 $109,200 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $46,700

TEXAS $1,113,475 $1,389,900 $929,456 $1,285,000 $10,106 $52,150 $0 $0 $0 $0 $0 $0 $2,053,037

UTAH $32,565,537 $28,236,903 $500,000 $500,000 $1,457,422 $1,751,769 $0 $0 $1,163,307 $1,752,124 $0 $0 $35,686,266

VERMONT $1,287,588 $1,204,268 $89,000 $99,000 $600,428 $719,647 $0 $0 $0 $0 $0 $100,000 $1,977,016

VIRGINIA $2,525,852 $4,438,994 $352,251 $663,188 $77,000 $312,000 $0 $0 $334,000 $809,120 $13,569 $15,909 $3,302,672

WASHINGTON $17,139,312 $12,640,946 $1,739,865 $1,855,966 $8,860,289 $9,463,537 $0 $0 $540,519 $4,092,693 $1,081,751 $1,597,125 $29,361,736

WEST VIRGINIA $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

WISCONSIN $7,307 ,926 $3,789,281 $1,091,735 $1,140,000 $4 ,831 ,819 $2,452 ,393 $2,344,050 $0 $7,584 ,282 $980,000 $826,203 $318,578 $23,986 ,015

WYOMING $241,260 $479,330 $0 $0 $23,032 $347,686 $0 $0 $63,310 $76,168 $0 $29,400 $327,602




APPENDIX C – NATURAL GAS EFFICIENCY PROGRAM 2010 EXPENDITURES AND 2011 BUDGETS BY REGION

REGION

A. RESIDENTIAL B. LOW INCOME C. COMMERCIAL D. INDUSTRIAL E. OTHER F. EM&V PROGRAMS

2010

Expenditures

2011

Budget

2010

Expenditures

2011

Budget

2010

Expenditures

2011

Budget

2010

Expenditures

2011

Budget

2010

Expenditures

2011

Budget

2010

Expenditures

2011

Budget

2010

Expenditures

NORTHEAST $141,840,646 $212,280,739 $53,447,338 $86,021,061 $70,050,491 128,980,619 $433,913 $2,736,844 $5,998,097 $23,690,228 $2,197,405 12,315,635 $273,967,889 $

MIDWEST $106,088,653 $145,780,514 $46,322,831 $52,215,249 $31,337,250 $57,617,996 $6,786,613 $2,110,491 $23,702,305 $26,394,863 $4,555,191 $5,877,203 $218,792,843 $

SOUTH $21,530,047 $30,748,053 $3,811,443 $4,238,057 $1,221,067 $4,168,451 $278,540 $441,596 $792,330 $1,236,457 $143,585 $385,788 $27,777,012

WEST $119,492,692 $122,642,121 $76,802,645 $80,145,941 $77,814,802 $85,966,533 $12,145,112 $31,071,152 $28,704,568 $64,531,039 $2,485,614 $7,959,569 $317,445,433 $

CANADA $16,588,930 $19,152,543 $8,037,093 $18,461,009 $19,345,395 $21,170,247 $9,027,136 $13,180,632 $22,354,565 $33,116,936 $736,784 $391,986 $76,089,904 $

UNITED STATES $388,952,038 $511,451,426 $180,384,256 $222,620,308 $180,423,610 276,733,599 $19,644,178 $36,360,083 $59,197,300 115,852,587 $9,381,795 26,538,195 $837,983,177 1,

N. AMERICA $405,540,968 $530,603,969 $188,421,350 $241,081,317 $199,769,005 297,903,847 $28,671,313 $49,540,715 $81,551,865 148,969,523 $10,118,579 26,930,181 $914,073,081 1,




APPENDIX D – NATURAL GAS EFFICIENCY PROGRAM SAVINGS IMPACTS B Y REGION

REGION RESIDENTIAL LOW INCOME COMMERCIAL INDUSTRIAL OTHER TOTAL THERM TRILLION BT

NORTHEAST 143,563,769 21,311,150 112,968,955 5,439,883 4,284,730 287,568,487 28.8

MIDWEST 87,286,004 14,718,753 46,599,661 38,454,811 17,018,010 204,077,238 20.4

SOUTH 3,846,194 449,357 1,372,627 39,185 ‐ 5,707,363 0.6

WEST 84,541,510 11,812,093 76,942,933 118,307,030 19,240,601 310,844,168 31.1

CANADA 112,490,203 122,623,081 260,873,450 40,588,192 1,266,233 537,841,159 53.8

UNITED STATES 319,237,478 48,291,353 237,884,176 162,240,908 40,543,341 808,197,257 80.8

NORTH AMERICA 431,727,681 170,914,434 498,757,626 202,829,100 41,809,574 1,346,038,416 134.6




APPENDIX E – SURVEY PARTICIPANT COMPANIES

COMPANY STATE OR

PROVINCE COMPANY

STATE O

PROVIN

Ameren Illinois Utilities (Ameren Corporation) IL Florida Public Utilities (Chesapeake Utilities Corp.) FL

Arkansas Oklahoma Gas Corporation AR Fortis BC BC

ATCO Gas AB Great Plains Natural Gas Co (MDU Resources Group) MN

Atmos Energy ‐ Colorado CO Intermountain Gas Company ‐ Idaho (MDU Resources Group) ID

Atmos Energy Iowa IA Interstate Power and Light Company ‐ Iowa (An Alliant Energy IA

Atmos Energy Kentucky KY Interstate Power and Light Company ‐ Minnesota (An Alliant Energy MN

Atmos Energy Mid Texas Division TX LaClede Gas Company (The LaClede Group Inc.) MO

Atmos Energy Missouri MO Madison Gas and Electric Company (MGE Energy) WI

Atmos Energy West Texas Division TX Manitoba Hydro MB

Avista Utilities ‐ Idaho (Avista Corp.) ID Michigan Gas Utilities Corporation (Integrys Energy Group) MI

Avista Utilities ‐ Oregon (Avista Corp.) OR MidAmerican Energy Company ‐ Illinois IL

Avista Utilities ‐ Washington (Avista Corp.) WA MidAmerican Energy Company ‐ Iowa IA

Baltimore Gas and Electric Corporation (Constellation Energy) MD MidAmerican Energy Company ‐ Nebraska NE

Berkshire Gas Company, The (UIL Holdings Corp) MA MidAmerican Energy Company ‐ South Dakota SD

Black Hills Energy ‐ Iowa (formerly Aquila) IA Midwest Natural Gas Corp. WI

Black Hills Energy Corporation ‐ Colorado Gas (formerly Aquila) CO Minnesota Energy Resources Corporation (Integrys Energy Group) MN

Cascade Natural Gas Corp ‐ Oregon (MDU Resources Group) OR Missouri Gas Energy (Southern Union Company) MO

Cascade Natural Gas Corp ‐ Washington (MDU Resources Group) WA Montana‐Dakota Utilities Co ‐ Montana (MDU Resources Group) MT

CenterPoint Energy ‐ Arkansas AR Montana‐Dakota Utilities Co ‐ South Dakota (MDU Resources SD

CenterPoint Energy ‐ Minnesota MN Montana‐Dakota Utilities Co ‐ Wyoming (MDU Resources Group) WY

CenterPoint Energy ‐ Oklahoma OK National Fuel Gas Distribution Corporation (National Fuel Gas NY

Central Hudson Gas & Electric Corporation NY National Grid ‐ Downstate Long Island NY

Chattanooga Gas Company (AGL Resources Inc.) TN National Grid ‐ Downstate Rhode Island RI

Cheyenne Power and Light Company ‐ Wyoming (Black Hills Corp) WY National Grid ‐ Massachusetts MA

Citizens Energy Group IN National Grid ‐ New Hampshire NH

City Gas Company WI National Grid ‐ New York City Downstate NY

City of Palo Alto CA National Grid ‐ New York Upstate NY

City Utilities of Springfield MO New Jersey Board of Public Utilities (for New Jersey Clean Energy NJ

Colorado Natural Gas, Inc. (Summit Energy) CO New Jersey Natural Gas Company (New Jersey Resources) NJ

Columbia Gas of Kentucky (NiSource Inc.) KY New Mexico Gas Company (Continenal Energy Systems LLC) NM

Columbia Gas of Maryland (NiSource Inc.) MD New York State Electric & Gas (Iberdrola USA) NY

Columbia Gas of Massachusetts (formerly Bay State Gas Company MA New York State Energy Research and Development Authority (or NY

Columbia Gas of Ohio (NiSource Inc.) OH Nicor Gas (Nicor Inc.) IL

Columbia Gas of Pennsylvania (NiSource Inc.) PA Northern Indiana Public Service Company (NiSource Inc.) IN

Columbia Gas of Virginia (NiSource Inc.) VA Northern Utilities ‐ Maine, D/B/A Unitil ME

Connecticut Natural Gas Corp (UIL Holdings Corp) CT Northern Utilities ‐ New Hampshire, D/B/A Unitil NH

Consolidated Edison of New York (Consolidated Edison, Inc.) NY NSTAR Electric & Gas Corporation MA

Consumers Energy (CMS Energy Corporation) MI NV Energy, Inc. (formerly Sierra Pacific Resources) NV

Corning Natural Gas NY NW Natural ‐ OR OR

Delta Natural Gas Company, Inc. KY NW Natural ‐ WA WA

Dominion

East

Ohio

(Dominion

Resources,

Inc.)

OH

Orange

&

Rockland

Utilities,

Inc.

(Consolidated

Edison

Inc.)

NY

Duke Energy Corporation ‐ Kentucky KY Pacific Gas and Electric Company (PG&E Corporation) CA

Duke Energy Corporation ‐ Ohio OH PECO Energy (Exelon Corporation) PA

Elizabethtown Gas (AGL Resources Inc.) NJ Peoples Gas/North Shore Gas (Integrys Energy Group, Inc.) IL

Empire District Gas Company, The MO Peoples Natural Gas Company (formerly Dominion Peoples) PA

Enbridge Gas Distribution Inc. ON & Philadelphia Gas Works PA

Enbridge St. Lawrence Gas NY Piedmont Natural Gas Company, Inc ‐ South Carolina SC

Energy Trust of Oregon ‐ FOR OR & WA OR Piedmont Natural Gas Company, Inc. NC

Equitable Gas Company LLC ‐ Pennsylvania (EQT Corp.) PA Public Interest Energy Research Program (PIER) CA

Fitchburg Gas and Electric Light Company D/B/A Unitil MA Public Service Electric and Gas Company (PSEG) NJ

Florida City Gas (AGL Resources Inc.) FL Puget Sound Energy (Puget Energy) WA



Natural Gas Efficiency Programs Report 2010 Program Year Page

COMPANY STATE OR

PROVINCE

Questar Gas Company ‐ Utah UT

Questar Gas Company ‐ Wyoming WY

Rochester Gas & Electric (Iberdrola USA) NY

San Diego Gas & Electric Company (SEMPRA Energy) CA

SaskEnergy SK

Source Gas Distribution (SourceGas LLC) CO

SourceGas Arkansas (formerly Arkansas Western Gas Co) AR

South Jersey Gas (South Jersey Industries Inc.) NJ

Southern California Gas Company (SEMPRA Energy) CA

Southern Connecticut Natural Gas Company (UIL Holdings Corp) CT

Southwest Gas Corporation ‐ Arizona AZ

Southwest Gas Corporation ‐ California CA

Southwest Gas Corporation ‐ Nevada NV

St. Croix Valley Natural Gas Company, Inc. WI

Superior Water, Light & Power Company (ALLETE) WI

TECO Peoples Gas (TECO Energy, Inc.) FL

Texas Gas Service (ONEOK, Inc.) TX

The Michigan Consolidated Gas Company (DTE Energy Corp) MI

UGI Central Penn Gas (UGI Corporation) PA

UGI Gas Service (UGI Corporation) PA

UGI Penn Natural Gas (UGI Corporation) PA

Union Gas Limited (Spectra Energy) ON

UNS Gas (UniSource Energy) AZ

Vectren Energy Delivery of Indiana (Vectren Corporation) IN

Vectren Energy Delivery of Ohio (Vectren Corporation) OH

Vermont Gas Systems, Inc. (Northern New England Energy VT

Virginia Natural Gas (AGL Resources Inc.) VA

Washington Gas Light Company ‐ Virginia (WGL Holdings, Inc.) VA

We Energies (Wisconsin Energy Group) WI

Westfield Gas & Electric Department MA

Wisconsin Energy Conservation Corporation (for Focus on Energy WI

Wisconsin Power and Light, An Alliant Energy Company WI

Wisconsin Public Service (Integrys Energy Group) WI

Xcel Energy Inc. ‐ Colorado CO

Xcel Energy Inc. ‐ Minnesota MN

Xcel Energy Inc. ‐ North Dakota ND

Xcel Energy Inc. ‐ Wisconsin WI

Yankee Gas Service (Northeast Utilities) CT

AGA Natural Gas Efficiency Programs Report - 2010 Program Year - FINAL - DeC 2011

Documents

Transcript of AGA Natural Gas Efficiency Programs Report - 2010 Program Year - FINAL - DeC 2011