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Designing, Implementing and. Managing a Home Upgrade Program. David Reed – JEA Conservation and. Efficiency Specialist ...
Designing, Implementing and Managing a Home Upgrade Program

David Reed – JEA Conservation and Efficiency Specialist

“Energy (Money) is neither created nor destroyed, it is only altered in form.” Ain’t Nothin Free

Session Goals • Each Community is different. Learn what will work with the resources you have and in your community; Always focusing on your community. • Understand some key factors/issues that need to be focused on when designing, implementing and/or managing an efficiency program. Some things will be my “opinion” and will be labeled as such. ** • That you leave with some ideas that help you to be more successful with your own program. • And, for you raters, that you see things from program perspectives and help you integrate what you do more effectively with the program you’re involved with.

Background

A Little About Me

A Little About JEA • 8th largest municipal utility (electric, water and sewer) in the U.S. – Electric service territory about 1.5 counties and water & Sewer about 3 counties. – 400,000 residential electric customers. – Over 100 years old. – ~ $2 Billion/year

FGBC Green Government Sustainability Ordinance

Microclimates

Structure

Environmental – RE Customer Service – JEA EA’s

Demand Side Management (DSM)

Conservation Programs (CP)

Paul - CFO

Bud - CPAO Jane – Dir. of Brand Management

DOE

Bruce – Man. Of Conservation Programs

BBP Managers

Richard – Dir. of Data Integration

Payson – Man. Of Residential DSM Brian – Man. for Honeywell

David – Specialist of C&E Auditors & Lenders

Selena – Specialist for Honeywell Upgrade Contractors

JEA Programs • DSM(09) - $8m-$10m a year (1/2 for residential) – Green Built Homes of Florida (New Construction) – Shopsmart & Investsmart – Neighborhood Energy Efficiency

• Conservation Programs(06) - $300k (FY09 - $2k) – – – – – –

BBP Grant (audits and financing) - $1.2m a year HEE Kits (backpack) Savings Without Sacrifice (Train the trainer) Trainings, events and speakers bureau Energy and Water Detective Lots, lots more….

GBHF • Launched in January of 2006 • Partnership between NEFBA and JEA (co-owned) • Had one builder and took 7 months to get a second on board. • Switched to DSM dept last year.

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184 258 434 584 964 844 1310

Shopsmart with JEA • Launched Nov. 2010 – – – – – – –

Appliances, CFL’s. Heat pumps and AC’s ($200-$450) Duct sealing ($50-$150) Heat pump/AC tune up ($25-$75) - discontinued Insulation (15c/sf or 30c/sf: $200 max) Window film ($30 window: ?? max) Solar water heaters ($800 – 10 year CP program) • $1,000 COJ ARRA funded incentive until May 2013 • PV – Net metering

– GBHF ($varies – 5 year CP program) – Neighborhood Energy Efficiency (low income)

BBP $$$

JEA $$$ BBP $$$

Better Buildings Program • Received notice of grant award in late June early July of 2010. CP Locked ourselves in a conference room for a couple weeks and created the basic structure of the program. – Provided incentives for audits and upgrade financing. • Couldn’t incent the upgrades due to JEA’s upgrade rebates. Too messy!!!!! • Started as a buy-down of the audits and 6% reduction in interest rate for efficiency upgrade loans.

• Started working on Infrastructure details mid to late August (about a month for basic structure). • Launched in Nov. 1, 2010 to coincide with launch of Shopsmart. (Contract signed 2/14/11 – Govt.!!)

BBP $$$

JEA $$$ BBP $$$

Initial Audit Buy-Down (make a splash) • • • • •

$100 Audit (main piece and spreadsheet) $100 Energy Modeling (Remrate/Manual J, etc) $50 Thermal imaging $50 Blower door Duct testing – $100 – $50 – $25

Duct blaster HVAC Test and balance Pressure pan testing of ducts

• Up to $175 for post installation inspection and testing (if necessary). • Spreadsheet and invoice…. • Couldn’t pay till January, but you’re a go if you believe you’ll get paid. Can’t guarantee, but should be o.k.

What’s Happenin?!?! Free ain’t Free • • • • • •

2/7/11 meeting with go live on 3/1/11 $75 Audit $50 Energy Modeling $50 Blower door $25 Thermal imaging Duct testing – $75 – $50 – $25

Duct blaster HVAC Test and balance Pressure pan testing of ducts

• Up to $150 for post installation inspection and testing (if necessary). • About a 30% drop in incentive levels.

3/10/11

BB Program Now (6/1/11) • 25% buy-down of audit with a max of $150 • 75% balance and any inspection fees paid as a rebate to customer after a 15% upgrade occurs with a max of $1,000 per project (including 25%) • 6% interest rate reduction on financing for upgrades. Went to zero interest loan program on 1/1/12 – – – –

Max 10 year term $5000 cap on interest buy-down Must be for eligible efficiency upgrade measures Must have an audit performed (loan eligibility form)

• Infrastructure not ready till mid September ($75k) • March to June – Farmed audits for retrofits

Questions?

Designing, Implementing and Running a Program

Rule #1: It’s All About the Benjamin's, Always, Always, Always!!!!!** Most of my job, time and effectiveness is based on dealing with the money

Step 1: Determine Who’s Money it is • Government Money (Major process for approval(s)!!) – Federal – State (FL HVAC rebate) – Local – City or Municipal Utility

• Private – Investor owned utility • Some guidelines but not as restrictive

– Foundation(s) – Etc.

• CLEARLY understand what they want for their money.

Step 2: Know the Rules for the Money and Who’s in Charge of it. • Your primary job will be to MOVE MONEY!!** Become real knowledgeable about accounting! • All money has rules attached to it and the rules are different for different buckets of money. • Who’s budget will it affect? All money must be accounted for and that means it will be attached to someone’s budget, maybe even multiple budgets. Their budget, their liability, their rules! • Is it “reimbursable” or do you get the money. – Reimbursable means someone will need to have/spend money up front and be reimbursed. (Folio/ budget request – 7 months (11/1 to 3/1) till paid on 1st invoice)

• Know the taxation requirements for all parties!!

Step 3: Determine How You Can “Move” the Money • NOTHING happens unless money is moving.** • What’s the time frame on moving the money. This is about cash flow and cash flow is KING!! – Fully understand the cash flow implications, especially for small businesses!!!! (PSC story) – Anything over 30 days needs to be addressed.

• What infrastructure do you have (probably based on who’s budget it’s in.) – How can you pay: credit card, checks(3-4 weeks), purchase orders, gift cards and tax exempt issues. – How much can you pay: breakpoints $5k, $50k, $200k – Who can you pay: Contractors, homeowners, etc. – How fast can you pay: cash flow

Step 4: Determine How/Who You Will Pay • Fully understand the issues associated with your payment structure. A “rebate” ain’t always a “rebate”. – Rebate (usually to end customers) • Is something that is paid after an event has occurred. (gift card) • Typically smaller payments and many, many payments to multiple people.

– Buy-Down (usually to contractors – cash flow issue) • Is paid upfront in reduced costs and “reimbursed”. • Larger payments sent to “companies” in your program

– Incentive (Usually to contractors – not a cash flow issue) • A payment made for services rendered • High values, easy but horrible PR

– Credit (taxes and utility bills) • Is a credit given toward future payment(s). Income/property taxes and utility bills • Must have a future payment for this to be a value.

• Is there a time lag between event and payment(s)? – Keep an eye on your budget and know when to stop.

Step 5: Set Up the Tracking & Reporting Mechanisms • How will you track the money? • Do you have access to the systems that track the money? Communications between systems is something to watch out for. • What time frame is there between systems? – Honeywell portal vs. JEA’s procurement system

• Do you have the information needed for reporting and reimbursements and is it in the proper format and time frame needed. • How strict does the accounting need to be?

Other Stuff • Davis-Bacon requirements (for program initiated construction) – Red tape - Payroll requirements (weekly verification and wage schedule), buy American, reporting, etc.

• Sarbanes-Oxley requirements – Who & how many are in the stream of payment flows and approvals.

• DUNS # and CCR # (be on the federal site) – More red tape – classification codes for business structure and then a lot of info 6-7 pages

• All of the above flow all the way through the system and take a lot of time and can be confusing. • Financial auditing requirements. – We’ve had to deal with 2 so far (internal and external)

• Time frames of events to payments(WIP). – Preregistration vs. open ended

• Budget forecasting, budget forecasting, budget forecasting!

Questions on Rule #1?

Rule #2: Focus, Focus, Focus on the Event! The home upgrade is what it’s all about. Focus on that, make it a great value for all involved and everything else will work out!

Step 1: Decide What you Want your Program to Do?!?! • Not as easy as it sounds. Many opinions! • Clearly define those goals and make sure everybody knows what they are (vision/mission). – DOE, CP, Brand, SEEA, DSM, COJ, etc. – Retrofits vs upgrades, energy savings (kWh saved), economic activity, PR, customer satisfaction/brand building, etc. – Not everyone understands things the same (HPC)

• Create a strategic plan that all program players can buy into. – Paint a picture of what you see your program doing. Make sure it’s a real value to your community. – Make sure you have a clear time frame.

Step 2: Design the Basic Program Skeleton/Structure • Make it as simple as possible. – Easy to understand, Easy to implement, Easy to Market, Easy to change, Easy to track.

• • • • • • •

Does it meet your goals? How does the money flow? Does it add value to the event? What infrastructure will you need? Reporting requirements. QA/QC requirements. Staff capabilities to implement the program.

Continued…. • Define the value proposition for all involved. What do “they/we” get for playing together. – Homeowner, Contractor, Program, etc. – Don’t “assume” values, get feedback!!! – Remember Rule #1!

• What type of “rebate” program is it? (remember simpler is soooooo much better) – – – – –

Rebate, buy-down, incentive and/or credit Pre-registration, open submittal, contractor submittal Required contractors or open market % efficiency upgrade or measure based $$ per measure, $% of cost, max’s for each

• Can it be sustainable beyond incentive $$. • If you use an outside organization to help run/manage you program make sure they have the ability to run the program you build, don’t build a program to their abilities.

Contractor submits • Pre-registration works well • Buy down services (reduced cost) – cash flow issue! • Pay first then get credit on work to be performed (Buy down) • For rebates to homeowner the contractor becomes a key figure (time & info). • Types of contractors • What and how do they submit?

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Homeowner submits Open submittal easier but with a CLEAR deadline. Pre-registration can work but messier unless contractor(s) are approved by program. Rebate or Credit (can’t do a buy-down). What and how do they submit? Time frame to rebate?

Contractors like • Rebates - the homeowner submits (cash flow and paperwork) • Clear and simple rules to play in the program. • Simple submittal requirements.

Homeowners like • Simplicity and clarity • Buydowns – no money out of their pockets up front.

Step 3: Fill in the Details • Once the basic program structure is complete and vetted, fill in the details. (3 weeks vs. 3 months) – This is where all the work is!! That’s one reason why simpler is better. – Program guidelines, applications, etc. – Payment structures (budget lines, etc.). – Contracts. – Program info (web, documents, etc). – Reporting systems. – Etc., etc., etc.

Step 4: Build STRONG Relationships with Local Stakeholders • Upgrades aren’t done by programs or “contractors”, they’re done by people! • These people are “YOUR” sales reps and will either make the program successful or make it a failure. • Talk to them!!! Get to know them and communicate often. • Understand that their time is $$$ and respect that. – Get an online meeting account and conference call service.

• Try to see things from their perspective. Get to know their businesses and issues facing them. – Good to do while you are building basic structure. – All contracting companies ARE NOT THE SAME. They have different cash flow issues, marketing abilities, employee issues, work schedules, internal infrastructures, etc.

• Support them, not the program, them. – Trainings, marketing, etc.

Step 5: Implement!!!!! • Once you start, stay focused on implementation. • Don’t “redesign” – Minor changes are fine but major changes are killers.

• Stay closely connected with your LOCAL stakeholders. Find out what’s working and what isn’t. • Look at your implementation processes and use process improvement techniques to make them more efficient. – Payment mechanisms, cash flow, marketing, communications, etc.

Other Stuff • “Deemed” savings (prescriptive upgrades) – FY2011 JEA Shopsmart Upgrades • • • •

2267 heat pump change outs (> 14 SEER) 2401 Duct system repairs/replacements 135 solar water heaters 3250 Insulation upgrades (