Presentation Title - APPRISE

Presentation Title - APPRISE

Maximizing Results from a High-Efficiency Furnace Program Jacqueline Berger, APPRISE Elliott Gold, PGW January 28, 2014 Presentation Outline PGW Residential Heating Equipment Rebate Program (RHER) Research Questions Market Study Impact Analysis Summary 2 PGWs Residential Heating Equipment Rebate Program 3

RHER Goals Promote selection of premium efficiency residential models. Increase customers awareness of energy efficiency opportunities. Strengthen PGWs relationship with customers as a partner in energy efficiency. Encourage market actors to provide and promote high efficiency options. Align incentives with other programs. Aid in market transformation towards the highest-efficiency options. 4 RHER Process Educate customers about RHER. CSP, PGW, equipment dealers, and contractor marketing. Provide information about program eligibility and rebates to customers. Includes a marketing document and a program application. Customers work with contractors and retailers to purchase and install eligible equipment. Customers complete the rebate application. Proof of purchase required. Contractor certification that the measure was installed. The CSP processes the application Checks customer and measure eligibility. Mails a Visa gift card (payments<$500) or check (payments>$500) to the customer if approved.

Notifies customer if it is not eligible, and the reason for rejection. Three percent of rebates receive a post-installation inspection. 5 RHER Rebates Original Rebate Revised Rebate Natural Gas Furnace 94% AFUE $250 $500 Natural Gas Furnace 94% AFUE, ECM Fan $250 $500 $1,000 $2,000

Measure Natural Gas Water Boiler 94% AFUE (w/electronic ignition) 6 Research Questions 7 Questions What is the market for high-efficiency equipment? How can PGW best market the program? What are the incremental costs of high-efficiency furnaces and boilers? Have rebates increased penetration of high-efficiency equipment? What are the barriers to increased participation? What are the savings from the installation of high efficiency furnaces and boilers? 8 Market Study

9 Participating Contractor Sample Contractors with 2 or more rebates 7/2012 2/2013 Interview Completed No Response Refused Wrong Number Language Barrier Contractors 38 20 9 6 2 1 10 Maximizing Contractor Response Advance letters were sent to the contractors using priority mail. The advance letters informed the contractors about the purpose of the survey and a $100 incentive that would be provided if they completed the survey. A toll-free number was provided for contractors to call in to complete

the survey. Up to 17 calls were made to contractors over a 4-week period. Messages were left three to six times for the contractors. 20-30 minute telephone interviews were conducted Interviews were completed between February 19, 2013 and March 18, 2013. 11 Participating Customer Sample Check Issue Date Between 10/1/12 and 12/31/12 Phone Number or Email Address in File Sample Selected Interview Completed No Response Refused No Phone Number Furnace Rebate Boiler Rebate Total

77 60 137 67 30 17 9 1 3 57 29 15 3 8 3 124 59 32 12 9 6

12 Maximizing Participant Response Advance letters were sent to the participants. Emails were also sent to the seven participants who did not have a phone number in the file and whose phone number could not be found in our look-up. The advance letters and emails informed the participants about the purpose of the survey and provided a toll-free number for participants to call in to complete the survey. Up to nine calls were made to participants over a 2-week period. Messages were left up to four times for the participants. 5-20 minute telephone interviews were conducted Interviews were completed between March 7, 2013 and March 21, 2013. One interview was completed with a furnace rebate recipient who had no phone number available, but who responded to our email with her phone number. 13 How should PGW focus their marketing efforts? 14 Contractor Information Sources How Contractor First Learned about RHER Supplier

Internet PGW Mailing PGW Email Customer City Displayed Brochure Home Show Trade Group Total # Contractors 8 3 3 2 1 1 1 1 20 15 Customer Information Sources RHER Information Source Contractor PGW Website PGW Bill Insert

PGW Mailing Realtor PA EnergyWorks Program News Report Family Contractors Mailing Dont Know Total Furnace Boiler Total Rebate Rebate 10 5 15 2 3 5 2 2 4 1 1 2 1 0 1 1

0 1 0 1 1 0 1 1 0 1 1 0 1 1 17 15 32 16 First Customer Information Sources Contractor Offered Information or Participant Asked about Rebate Heard from Contractor Contractor Offered Information

Asked Contractor About Rebate Didnt Discuss with Contractor Dont know/ No answer Total Furnace Rebate Boiler Rebate Total 10 3 1 2 1 17 5 2 6 1 1 15

15 5 7 3 2 32 17 How large is the market for highefficiency furnaces and boilers in Philadelphia? 18 Annual HVAC Installations In Philadelphia Past Year Installations in Philadelphia in the Past Year 0 <25 25-49 50-99 100-199 500 Dont Know Total

# Contractors Gas Furnace Gas Boiler Existing Homes New Homes Existing Homes New Homes 0 9 4 4 1 1 1 20 10 9

0 1 0 0 0 20 0 14 3 1 1 0 0 20 17 3 0 0 0 0 0 20 19 High Efficiency Penetration

Percent of 2012 Installations that were High Efficiency <10% 10% - 24% 25% - 49% 50% - 74% 75% - 99% 100% Dont Know Total # Contractors Gas Furnace Gas Boiler 2 6 2 4 4 1 1 20 2 5

3 3 5 1 1 20 20 Do contractors know how to educate customers and market high efficiency furnaces and boilers? 21 Contractor Report When Information Provided Situations When Contractor Educates Customer about High Efficiency Option Always Majority of the Time When it Works in the Home Total # Contractors 15 3 2

20 22 Contractor Report Frequency Information Provided Percent of Jobs where Contractor Educates Customer about High Efficiency Option 100% 90%-99% 80%-89% 50% Total # Contractors 16 2 1 1 20 23 Contractor Report Information Provided to Customers Information Provided to Customers About Gas

Usage and High Efficiency Equipment AFUE Rating or Savings Estimate PGW Website Information/Savings Calculation Percent Savings/Cost Comparison Manufacturer Literature and Forecasted Savings Does Not Mention or Promise Savings Environmental Benefit Not much information # Contractors # Contractors Gas Furnaces Gas Boilers 9 7 5 7 5 6 3 4 3 3 1 1 1 1 24

Customer Report Information Provided by Contractor Information Contractor Provided about Gas Usage and Cost Compared to Other Options Furnace Rebate Boiler Rebate Total Did Not Discuss Much Gas Savings, But not Specific Amount Approximate Percent or Dollar Savings Savings from Switching from Oil to Gas AFUE Percentage Differences Savings Based on Actual Usage 4 7 3 1 2

1 8 4 2 2 0 0 12 11 5 3 2 1 25 Is the program increasing the frequency of high efficiency sales? 26 Contractor Report High Efficiency Sales Change High Efficiency Sales Comparison to Before Rebates

Much Increased Increased Somewhat Increased No Change Dont Know Total # Contractors Gas Furnace Gas Boiler 5 6 3 5 1 20 5 7 3 4 1 20 27

Contractor Report Role of Rebate in Sales Presentation Role of PGW Rebate in Sales Presentation # Contractors Big Role / Very Important 14 Helps in Sale 3 Depends on Customer 1 Small Role 1 None 1 Total 20 28 Contractor Report Rebate Influence on Sales Extent to Which High Efficiency Sales are Due to PGWs Rebates Extremely Important (100%) Very Important (60%-80%) Important (25%-50%) Somewhat Important (15%-25%)

Not Important (<10%) Total # Contractors 6 3 5 2 3 20 29 Customer Report Rebate Importance Importance of PGW Rebate in Decision to Purchase High Efficiency Very Important Important Helpful Not Very Important Not At All Important Total Furnace Rebate

Boiler Rebate Total 5 2 3 3 4 17 12 2 0 0 1 15 17 4 3 3 5 32

30 Customer Report Other Purchase Factors Factors that Influenced Decision to Purchase High Efficiency Monthly Costs / Gas Savings Environmental Concerns Installation Issues/Venting/Size Resale Value Condition of Existing Equipment Maintenance EnergyWorks Audit Recommendation Furnace Rebate 11 4 4 1 0 0 0 Boiler Rebate 11

3 3 0 1 1 1 Total 22 7 7 1 1 1 1 31 Are rebates set at the right level? 32 Contractor and Customer Report Rebate Sufficiency Rebate Amount is Sufficient to Encourage Purchase of Higher

Efficiency Equipment Yes Sometimes No Not Sure Total # Contractors Gas Furnace Gas Boiler 11 2 7 -20 15 2 3 -20 # Customers Gas Gas

Furnace Boiler 12 -5 0 17 13 -0 2 15 33 Customer Report How Long Considering Replacement How Long Considering Replacement Heard from contractor Right after heard about rebate < 6 months 6-11 months 1-3 years 8-10 years Dont Know Total Furnace

Rebate 10 0 1 2 2 1 1 17 Boiler Rebate 5 1 3 2 3 1 0 15 Total 15 1 4 4 5

2 1 32 34 Contractor Report Incremental Cost Variability Incremental Costs Vary Widely by Home Yes No Total # Contractors 9 11 20 35 Contractor Report High Efficiency Furnace Incremental Cost Incremental Costs Of High Efficiency Furnaces Compared to Least Expensive $600-$800

$1,000-$1,200 $1,800-$2,500 $3,000 $3,500 $4,000-$5,000 Dont Know/Refused Total # Contractors 2 3 8 1 1 1 4 20 36 Contractor Report High Efficiency Boiler Incremental Cost Incremental Costs Of High Efficiency Boilers # Contractors Compared to Least Expensive Alternative $600-$700 2

$1,500-$2,000 4 $3,000 4 $4,000 4 $5,000 2 $4,000-$7,000 1 Dont Know/Refused 3 Total 20 37 Customer Report High Efficiency Incremental Cost Incremental Cost of High Efficiency Quote $600 - $1,000 $1,001 - $1,500 $1,501 - $2,000 $2,001 - $3,000 $3,001 - $4,000 $4,001 - $5,000

$6,001 - $7,000 Did Not Discuss Alternatives Dont Know Total Furnace Rebate 3 4 3 1 0 0 0 2 4 17 Boiler Rebate 0 0 0 1 4 1 1

6 2 15 Total 3 4 3 2 4 1 1 8 6 32 38 What are the Barriers? 39 Contractor Report High Efficiency Barriers Reasons Customers do not Install High Efficiency Equipment Cost

Installation issues Does not intend to remain in home Not comfortable with new technology Landlord renting out home Shorter warranty # Contractors 15 5 2 1 1 1 40 Impact Analysis 41 Impact Methodology

Billing analysis Determination of fuel switchers Later participant comparison group Matched comparison group Findings by boiler/furnace and pre-usage level 42 Annual HVAC Installations In Philadelphia Past Year Later Participant Comparison Group Treatment Group Non Normalized Degree Day PRISM Pooled Regression Pooled Month Dummy Comparison Group Usage (ccf) Savings Obs Pre Post ccf

% Net Savings Usage (ccf) Obs Pre Post Savings ccf % 202 856 713 144 16.8% 169 934 833 101 10.8% 202

202 949 926 783 773 166 153 17.5% 169 994 16.5% 169 966 947 944 48 22 4.8% 2.3% 118** 12.5% 130** 14.1% 202

903 751 152 16.8% 169 948 896 52 5.5% 100** 11.0% 202 908 756 152 16.7% 169 933

882 51 5.4% 101** 11.1% ccf % 43 5.0% 43 Annual HVAC Installations In Philadelphia Past Year Matched Comparison Group Treatment Group Non Normalized Degree Day PRISM

Pooled Regression Pooled Month Dummy Comparison Group Usage (ccf) Savings Obs Pre Post ccf % Net Savings Usage (ccf) Obs Pre Post Savings ccf % 202 856 713

144 16.8% 190 855 824 30 3.6% 202 202 949 926 783 773 166 153 17.5% 190 940 16.5% 190 917 882

897 57 21 6.1% 2.3% 108** 11.4% 132** 14.3% 202 903 751 152 16.8% 190 879 851 27 3.1%

124** 13.8% 202 908 756 152 16.7% 190 883 27 3.0% 124** 13.7% 911 ccf % 113

13.2% 44 Annual HVAC Installations In Philadelphia Past Year Later Participant Comparison Group Degree Day Normalization Treatment Group Comparison Group Furnace Boiler Obs Usage (ccf) Pre Post 162 40 882 1,220 732

990 Savings ccf % Usage (ccf) Savings Obs Pre Post ccf % 150** 17.0% 122 892 842 50** 229** 18.8% 47 1,260 1,219 41 5.6% 3.2% Net Savings ccf % 100** 11.3% 189** 15.5% 45

Key Findings and Recommendations 46 Findings Contractors do not often provide customer-specific savings estimates Contractors need more information to effectively educate customers RHER has impacted installation of high-efficiency furnaces and boilers Both contractors and customers feel RHER rebate is important in high efficiency purchase decision Customers are also likely to cite environmental concerns Incremental costs are highly variable Rebate does not usually cover 80% of incremental costs Venting barriers often present Savings estimate range from 100-130 ccf (11%-14%)

47 Recommendations Continuing marketing at supply houses Improve and update RHER information on PGW website Investigate whether joint marketing with electric utility is possible Train contractors on selling high efficiency equipment Consider incentive that varies based on costs or housing characteristics Revise protocol savings formula 48 Save The Dates For more information - www.aesp.org

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