Tucson Electric Power 2011 Energy Efficiency Implementation Plan Stakeholder Meeting January 10, 2011
Agenda Introduction Overview Residential Programs Behavioral Programs Commercial Programs EE Financing Cost Recovery Questions
Who are we? The Demand Side Resources Group
What is Energy Efficiency? Using less energy to provide the same level of energy service. ACC has added Demand Response and Conservation to the definition.
Why Energy Efficiency? 3.00% Annual Energy Reduction as Percentage of Retail Sales 2.50% 2.00% 1.50% 1.00% ACC Order No. 745869 passed October 30, 2010. 0.50% 0.00% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gigawatt Hours (GWh) Why Energy Efficiency? 2,500 Cumulative Energy Savings Required by 2020 2,000 In other words, a 22% reduction in retail sales by 2020 1,500 1,000 500 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Why Energy Efficiency? When we meet our goals, we will have saved enough energy to power 18,000 x * * Over the life of the program, based on annual consumption of 11,361 kwh of one home and total savings necessary of 2,137 GWh.
TEP Portfolio Residential Behavioral Commercial New Construction (GHP) Low Income Weatherization Home Energy Reports In-Home Energy Displays (Pilot) C&I Comprehensive Small Business Direct Install Shade Trees Direct Load Control K-12 Energy Education Direct Canvassing Prescriptive and Custom Prescriptive and Custom Existing Homes & Audit Direct Install Efficient Products (CFL) CFL Giveaway Community Education New Construction Direct Load Control Multi-Family Appliance Recycling Retro- Commissioning School Facilities Combined Heat and Power (CHP) Bid for Efficiency Pilot
Who Can Participate? Residents, schools, and businesses in the TEP service territory, which includes the greater Tucson Area. UniSource Service Territory
Residential Programs New Construction (GHP) Shade Trees Low Income Weatherization Existing Homes & Audit Direct Install Efficient Products (CFL) Multi-Family Appliance Recycling
Program Phase-In Timeline Current Shade Trees Low Income Weatherization New Construction (GHP) Efficient Products (CFL) 2011 Existing Homes & Audit Direct Install Appliance Recycling 2012 Multi-Family
Behavioral Programs Direct Load Control In-Home Energy Displays (Pilot) Home Energy Reports K-12 Energy Education Direct Canvassing CFL Giveaway Community Education
Program Phase-In Timeline Current Home Energy Reports K-12 Energy Education Power Partners 2011 Community Education CFL Giveaway 2012 Direct Canvassing
Commercial Programs C&I Comprehensive Small Business Direct Install New Construction School Facilities Retro- Commissioning Direct Load Control Combined Heat and Power (CHP) Bid for Efficiency Pilot
Program Phase-In Timeline Current C&I Comprehensive Small Business DI New Construction Direct Load Control 2011 Bid for Efficiency Combined Heat & Power 2012 Schools Retro- Commissioning
Energy Efficiency Financing Support for Existing Homes Program Financing used only for ACC-approved measures Begins with detailed energy analysis
Energy Efficiency Financing 3 rd Party Lender Loan Loss Reserve Interest Rate Buy-down
Energy Efficiency Financing 640 FICO Score 50% Debt to Income 12-yr Max Loan Term Up to $15,000
Energy Efficiency Financing Offered through approved customers Prequalification by phone $2M loan value for TEP and $1M loan value for UNSE
Cost Recovery DSM Tariff has three components: 1. Recovery of program expenses 2. Performance Incentives 3. ARRT (Authorized Revenue Requirement True-Up)
Program Expenses Request a 19 months adjusted surcharge for 2011 and 2012 Start = June 1, 2011 End = December 31, 2012 Start January 1st for 2013 (and every year thereafter) Filed by June 1 st, 2012
Program Budgets 2011 Budget 2012 Budget Total Support Programs $1,194,431 $1,230,836 $2,425,267 Behavioral Programs $1,173,073 $2,013,527 $3,186,600 Residential Programs $8,430,199 $10,327,106 $18,757,305 2011 and 2012 Program Budgets Commercial & Industrial Programs $7,927,332 $9,477,817 $17,405,149 Demand Response Programs $3,453,846 $2,902,267 $6,356,113 Program Measurement and Verification $756,890 $885,143 $1,642,033 Program Support & Development $1,295,238 $1,334,095 $2,629,333 Program Expenses Total $24,231,009 $28,170,791 $52,401,800 2010 Performance Incentive $1,100,000 NA NA 2011 & 2012 Performance Incentive $4,287,410 $5,448,114 $9,735,524 Authorized Revenue Requirement True-up $3,007,572 $9,572,915 $12,580,487 Total $32,625,991 $43,191,820 $74,717,811
Performance Incentives Current = Expenses + Performance Incentive (PI) 10% net Benefits capped at 10% of expenses 2010 - $1,100,000 (expected) Proposed Performance Incentive for TEP / UNSE Based on a tiered performance incentive Capped at 10% of net benefits 2011 2012 Total Total Net Benefits $61,248,716 $77,830,201 $139,078,917 7% of Total Net Benefits $4,287,410 $5,448,114 $9,735,524 Proposed Cap (10% of net benefits) $6,124,872 $7,783,020 $13,907,892 Performance Incentive (after-tax) $4,287,410 $5,448,114 $9,735,524
Authorized Revenue Requirement True-Up (ARRT) Bridge mechanism to next rate case Non-fuel rate* multiplied by rate class EE kwh Values: 2011 = $3 million, 2012 = $9.6 million, 2013 = $8 million (decoupling starts mid-2013) * from the last cost of service study approved in the most recent rate case