EmPOWER Maryland Home Performance with ENERGY STAR© Discussion January 13, 2015 Discussion Points from Efficiency First Maryland to the Maryland Public Service Commission To Calvin Timmerman, Here are Efficiency First’s discussion points: 1. Discuss what you think is not working 1. The current program, while well intended, inadvertently drives us all to maximize rebates, not comprehensive savings. Thus jobs hover very close to $4,000. 2. Is EmPOWER only about energy, or is it also about improving occupant comfort, health and safety? These other attributes seem to be more effective in drumming up customer interest. 3. Is EmPOWER only about energy, or is it also about workforce development? The core HVAC rebates are for low-quality box-swapping with no requirements for permitting or system sizing or any significant work by the HVAC contractor, so does not promote HVAC industry evolution to better practices. The current HPwES program does a good job of excluding “blow and go” insulation installers, and BPI standards make it a very high quality program. 4. SIR requirements eliminate 10% of customer projects, individual measure requirements reduce job scopes, and leave savings on the table such as insulation minimums for rebate eligibility. Combustion safety requirements eliminate about 10% of customer projects. Thus, about 25% of industry revenue potential is not being realized. SIR impacts profitability of contractors, and may ultimately limit the ability to grow a core industry. 5. Instant Audits to Proposals: Inability to sell jobs during audits is crippling. When people are most interested and are most ready to buy, we can’t deliver real-time proposals because we can’t figure out if customer will qualify for rebates in the house. 6. Current incentives are narrow in focus, and only truly drive air sealing and attic insulation. 7. The PLOM is another barrier to real-time proposals. 8. No co-operative advertising. 9. No guerilla marketing. Very small penetration of community organizations. 10. No link to home value. 11. Weak link to QHEC. 12. No on-bill financing for residential. 13. MHELP is almost depleted. 14. There is a tremendous amount of residential home improvement occurring outside of HPwES that is non-optimized. For example, people hiring their own blow & go contractor to put R-30 or R-38 in their attic. While the HVAC program gives rebates, why can’t we give rebates to people who DIY or who use non-BPI contractors to go above and beyond the baseline or standard behavior? Yes, this is competition for us, but it is more critical to get people participating! Once they learn about rebates, they might want to see how they can get more.

EmPOWER Maryland Home Performance with ENERGY STAR© Discussion January 13, 2015 Discussion Points from Efficiency First Maryland to the Maryland Public Service Commission

2. Discuss what is being done elsewhere 1. Connecticut loans… Their 10-year, $20,000 loan has a $193 monthly payment at 2.99%. $10,000 loan costs $96 per month. 2. NJ has 50% up to $5,000 in incentives (incentive based on modeled savings) and 0% financing up to $10,000. No audit incentive. 3. KY uses loans. 3.99% for 5 year loans, 6.99% for 10 year loans up to $15K. Up to 15% for non-energy items. 4. Energy Upgrade California has 2 paths… prescriptive and advanced. Advanced uses modeled savings. 5. PACE!!! 6. Consumers Energy (Mississippi) – long list of incentives based on specific retrofit activities. 7. Delaware - long list of incentives based on specific retrofit activities. 8. Midwest Alliance – “Improving the comfort, safety and value of America's housing stock” 9. Sacremento Municipal (SMUD) – very generous rebates up to $5K for gas heated, $8K for electric heated. 10. Illinois is linking to GreenMLS and providing completion certificates. 3. Community organization collaboration (from EmPower Order) 1. We want this. 4. Assisted HPwES for moderate income (from EmPower Order) 1. We want this. 5. Brainstorm a series of options, various approaches, develop ideas on a list with no critique 1. The “Negawatt” Proposal - http://www.greentechmedia.com/articles/read/nergy-andHome-Performance-Programs-Need-Serious-Reform - pay per saved kwh or therm. This is the “advanced path.” 1. Utilities should pay 50-80 cents per kwh saved to account for the lifetime savings of the measures (this is about 50% of the discounted value over 10-20 years depending on the measure), and $3-$4/therm for the same reason. Ideally we can pick a single rate per fuel to simplify marketing, or we could have a rate per measure type (35 cents for air sealing, 50 cents for insulation, 25 cents for HVAC). Utilities are simply “buying” a portion of the savings back from the home owner in the form of incentives… ratepayers still get ample benefits as well, including peak demand, which can drive us to TRC <1.0. 2. Get the program to pursue homeowner reviews and post/rank company results. 3. Track actual savings against predicted savings, if possible. Try to figure out how to improve the modeling software, and try to recognize firms that do a good job with their audits.

EmPOWER Maryland Home Performance with ENERGY STAR© Discussion January 13, 2015 Discussion Points from Efficiency First Maryland to the Maryland Public Service Commission 2. Create a prescriptive path as well. A customer who participates once is more likely to participate again. Create a small, cheap rebate program for people who do work outside the program. This could help us get more reported savings from people who get audits but choose to DIY, or who use non-affiliated contractors, or who choose to do small jobs. Have them submit receipts for materials, photos proving installation, and perhaps give the rebate back as bill credits to reduce fraud. The prescriptive path should include “advanced path” education to inform people how there is significantly more money available through a whole home approach done by BPI certified HPwES contractors. Most customers never hear about HPwES because they don’t read utility bill inserts and they never interact with HP contractors. We need a bigger reach where all home improvement contractors become participating. It gives the quality programs like HPwES more exposure. 3. Beacon needs to be moved locally to tablet or laptop instead of relying on fast Internet connections. Sync at the office. If Beacon worked reliably in the house, we could create proposals in the house. We do not want Beacon to be the proposal platform. 4. Incentives for Quality Installation for HVAC. The Advanced Path should include many QI features by default such as proper system sizing (Man J) when replacing systems. 5. Create a 10-year, 2.99% loan up to $25,000 with a 25% allowance for non-energy measures, in addition to rebates. We were happy with MHELP structure. 6. Create a 10-year 0% loan up to $25,000 with a 25% allowance for non-energy measures, which precludes rebates. We were happy with the MHELP structure. 7. Would like LED lighting to be rebate eligible when done as part of HPwES project. LED lights have a 25 year expected life. CFLs have shorter lives, and perhaps this program would prefer to focus on LED? 8. Stop the HVAC early retirement penalty! The HVAC component of the rebate has to be easy to calculate, and should assume a working system has been retired early when working systems are being replaced. If the system is replacing a failed system, then it makes more sense to calculate the savings based on increment above standard. Or, you could get the age of the system, apply an early retirement rate for the first X years, and the above standard rate for the remaining years. 9. Beacon needs to do a better job on quantifying duct sealing savings, including the behavioral elements that inevitably result from improved distribution. People might lower their thermostats in winter if the heat gets to the rooms where they want to spend their time! 10. How about featuring Gold Star contractors, who have made Quality Commitments to BPI, at the top of the list of contractors on the website instead of doing it purely by alphabetical? 11. Completely eliminate SIR, PLOM, all minimum performance standards for rebate eligibility. Retain quality control standards only such as BPI standards, or code standards. Or perhaps PLOM becomes a handout of general guidelines / education documents similar to the HPwES brochure. 12. Give us something related to NEST and other home control devices so that we can sell new technology and automation as part of the Home Performance value proposition. Compensate us to deliver technology linked to demand response.

EmPOWER Maryland Home Performance with ENERGY STAR© Discussion January 13, 2015 Discussion Points from Efficiency First Maryland to the Maryland Public Service Commission 13. Allow contractors to adopt newer versions of the BPI audit standard and ASHRAE 62.2 standards. 14. We acknowledge that some HPwES contractors have to change… the program could force contractors to identify their HVAC capabilities and partners to make sure they have the capability to include HVAC and duct improvements in the scope of work. Program participants who are only selling insulation and air sealing should have HVAC partners lined up and have an active referral process. 15. HPwES education should focus on HVAC and ducts, windows and doors, roofing, etc. Items that will help grow General Contractors to solve a large variety of customer problems in an energy efficient way. Beacon should be improved to accommodate the installation of these items in Energy Star configurations, and to recognize savings that get created. 16. Change audit content to shorten audit length: 1. Test spillage and draft in the house as you find it, not opening doors for testing purposes. Since “Stop Work” only occurs on failures in natural condition, this test is stricter than the traditional natural test with all doors open. If house fails, then test traditional natural. 2. Provide a program-sponsored warning on combustion failures… ask customers to agree that they have to pass safety testing to receive rebates. 17. While most HVAC transactions are box swaps, we could “nudge” people towards a better way by creating an incentive for customer to select the high quality work done by HPwES contractors (and their HVAC partners) and having HVAC work done within the HPwES context. The HPwES rebate should be higher than the box-swap rebate. The higher rebate would pay to ensure proper permitting, and for system verification (“quality install”). 18. Cut utility traditional marketing and Create co-op advertising. Create Energy Coaches. 19. Home Energy Score sponsored by EmPOWER. Create relationship with MLS to list results. Preferably HES is built into beacon and provided as an add-on for customers for a price determined by the contractor. 20. Program certificates of completion for Home Owners. Certs can be listed on MLS. 21. Beacon could include CO2 savings, environmental impacts, predictions on home value or durability, and the financial section should be optional on the report given how all contractors will provide separate proposals. 22. More experimentation for turning eligible QHECs into HP jobs quickly. Instead of utility follow up, what about follow up calls from HP contractors for customers who have audits recommended by qhec techs.