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City of Palo Alto Utilities DEMAND SIDE MANAGEMENT PROGRAM Energy Efficiency, Water Conservation and Renewable Energy Measures for Fiscal Year 2010 December 2010

Table of Contents Demand Side Management Programs

EXECUTIVE SUMMARY 3

POLICY BACKGROUND AND PROGRAM GOALS BACKGROUND FOR ENERGY AND WATER

DEMAND SIDE MANAGEMENT PROGRAMS 5

ACHIEVEMENTS IN FISCAL YEAR 2010: ENERGY AND WATER

EFFICIENCY 9

DSM Program Activity and Savings Summary 10

Expansion of Programs 14

Increase in Expenditures 14

DSM Program Overview 16

GENERAL PROGRAM NOTES AND UPDATES 19

Net Versus Gross in Electric Savings 20

Evaluation, Measurement and Verification 20

Research and Development Projects 20

APPENDICES

APPENDIX A: CURRENT CPAU DSM PROGRAM DESCRIPTIONS 23

APPENDIX B: DISCUSSION OF TECHNOLOGIES AND SUMMARY OF ACHIEVEMENTS BY

END USE CATEGORY 26

APPENDIX C: COMPARATIVE CHART OF PAST AND CURRENT DSM EXPENDITURES 34

APPENDIX D: STATEWIDE ENERGY AND WATER USE BREAKDOWN BY UTILITY AND

CUSTOMER CLASS 35

APPENDIX E: ANALYSIS AND LISTING OF NON-COST-EFFECTIVE MEASURES 39

APPENDIX F: ELECTRIC DSM REPORT TO CMUA FOR ITS REPORT TO THE

CALIFORNIA ENERGY COMMISSION 43

APPENDIX G: STATE AND CITY MANDATES CONTROLLING PROGRAM GOALS AND

IMPLEMENTATION 44

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Demand Side Management (DSM) Program

Results for Fiscal Year 2010

Executive Summary

The City of Palo Alto Utilities (CPAU) exceeded all its efficiency goals for the fiscal year ending June 30, 2010 (FY 2010). This achievement is attributed to the increased number of programs available for all customer types, as well as an expansion of programs administered by third party agencies. Such third party program administration enhances the City’s ability to set and achieve greater efficiency goals while freeing up staff and other resources for additional programs and projects.

DSM Goals for FY 2010

The chart below summarizes the FY 2010 savings goals and achievements. To put this year’s goals in context with past years, see charts in sections below for each commodity.

Savings Goal Achievement Commodity % of Load Commodity

Savings % of Load Electricity 0.31% 6,586,928 kWh 0.55% Gas 0.32% 106,479 therms 0.40% Water 0.34% 67.03 ccf 1.35%

Renewables

Implementation Goal

Achievement

Solar Electric (PV) Systems Solar Water Heating Sys.

650 kW 30 systems

313 kW 7 systems

Greenhouse Gas Reduction

The City’s Climate Protection Plan includes CPAU’s electric and natural gas efficiency goals to assist the City in meeting its sustainability goals. As seen in the table below, CPAU significantly exceeded the electric efficiency goal, but made more limited progress in other areas, primarily because natural gas upgrades are more expensive and have longer payback periods. This is particularly the case for solar water heating, which is not cost-effective in this climate.

Program 2020 Goal

CO2 Tonnes Reduced 2010 Achievement

CO2 Tonnes Reduced Electric Efficiency 15,800 6,022 Solar Electric (PV) 3,800 1,113 Natural Gas Efficiency 7,300 1,536 Solar Water Heating 1,500 12

Energy and Water Efficiency as a Supply Resource

The goal of programs promoting efficiency is to be cost-effective when compared to the cost of purchasing new supplies. The table below summarizes purchase costs for supply and efficiency on a unit basis:

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Per Unit Costs FY 2008 FY 2009 FY 2010 Future Efficiency Efficiency Efficiency Supply

Water $/CCF $ 3.49 $ 4.57 $ 3.07 $ 3.69 Gas $/therm $ 0.752 $ 0.496 $ 0.408 $ 0.91 Electric $/kWh $ 0.029 $ 0.0465 $ 0.0638 $ 0.11

Expansion of Programs During the past three years, CPAU has expanded the number and variety of efficiency programs in all utilities and for all customer classes. From residential usage information and comparison in the Home Energy Reports to industrially-focused process, natural gas and chiller programs through the Commercial and Industrial Energy Efficiency Program, there are many more ways for customers to access efficiency measures than ever before. In addition, funding has been significantly enhanced for ongoing programs that were found to be cost-effective, such as the Right Lights+ energy saving program for small businesses and the Santa Clara Valley Water District water conservation programs, so their reach could be expanded. For the upcoming year, further additions to the DSM programs portfolio are being solicited through a Request for Proposals process. See Appendix A for a complete listing of all current DSM program activities.

Expenditures CPAU programs help customers get the most for their utility dollar, reduce their demand for electricity, natural gas and water and reduce greenhouse gas emissions. To achieve its aggressive resource efficiency goals, Palo Alto has expended about $22 million for demand-side management (DSM) between 2003 and 2010. For FY 2010, about $6 million was spent from public benefit and supply funds. CPAU estimates that it will spend a similar amount in FY 2011 from the operating budget and transfers from reserves. Of this $6 million, $4.8 million is from electric public benefit and supply-purchase funds, about $800,000 is from natural gas public benefit funds, and just under $500,000 is from water DSM funds.

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POLICY BACKGROUND AND PROGRAM GOALS

For Energy and Water Demand Side Management Programs

POLICY BACKGROUND AND PROGRAM GOALS For Energy and Water Demand Side Management Programs

Introduction

This annual report provides an update on expenditures and resource savings from the efficiency programs, solar electric installations, and other projects implemented by the City of Palo Alto Utilities (CPAU). The report includes information on program effectiveness and energy efficiency achievements that will be provided to the California Energy Commission (CEC) in the first quarter of 2011. Details on the programs, information used in the analysis and summaries of CEC submittals are included as Appendices. This report also compares achievements against the goals developed in the Ten-Year Electric Energy Efficiency (EE) Portfolio Plan, first adopted in 2007 and updated in May 2010. Other state and local requirements are discussed as well.

Policy Background For electric utilities, California law (see citations for State laws and local requirements in Appendix G) requires the implementation of specific programs which contribute social and environmental benefits to the state. These “public benefit” programs are required by law to be funded at specific levels and may include the following:

Cost-effective, demand-side management services to promote energy-efficiency.

New investment in renewable energy resources and technologies consistent with existing statutes and regulations that promote those resources and technologies.

Research, development and demonstration programs in the public interest which advance science or technology not being adequately provided for by competitive and regulated markets.

Services for low-income electricity customers including, but not limited to, targeted energy-efficiency installations and rate discounts.

Currently, California does not have similar laws placing “public benefit” requirements on gas and water utilities. However, CPAU began collecting public benefit-type funds for the gas and water utilities in 1996. These funds are used for programs similar to those itemized above.

Goals and Policies CPAU successfully met its FY 2010 efficiency savings goals for water, electricity and natural gas. CPAU has many demand-side management goals for all its utilities that are designed to support the City’s environmental and sustainable policies.

These environmental and sustainability policies are outlined in the following documents. Note that the documents are more fully described in Appendix G :

Climate Protection Plan

Long-term Energy Acquisition Plan or LEAP,

Gas Utility Long-term Plan or GULP,

2005 Urban Water Management Plan 6


Electric Efficiency Goals

To meet both State-mandated and locally-desired goals, the City Council approved a Ten-Year Energy Efficiency Plan in April 2007. In May 2010, City Council approved an update to the Ten-Year Electric Energy Efficiency (EE) Plan, with new annual EE goals that are more than double those approved in the 2007 plan. The new goals also aim to meet state mandates requiring energy efficiency to be given first priority in evaluating utility supply options. By law, the Ten-Year Electric EE Plan must be updated and submitted to the CEC every three years.

2010 Ten-Year Electric Energy Efficiency Plan (EE Plan) highlights:

A 10-year cumulative goal of a 7.2% reduction in projected annual energy use to be achieved by FY 2020. This is double the goal of the 2007 plan and represents savings on top of all the savings that will occur “naturally” because there are increasingly more efficient products in the market

The EE Plan reaches its cumulative savings goal of 7.2% by 2020 by starting with an annual incremental savings goal for FY 2011 equal to 0.6% of projected annual electricity use. That goal then increases 0.05% per year to reach a 0.8% annual savings goal by FY 2015; the 0.8% target will then be maintained until FY 2020.

In addition to the $1.8 million per year Public Benefits funds used for EE measures and programs, the EE Plan calls for using up to $1.2 million per year from supply funds to implement programs for three years starting in FY 2011.

Gas Efficiency Goals

The Council-approved 2007 Ten-Year Energy Efficiency Plan also included cumulative annual gas energy efficiency goals for each year between 2008 and 2017, adding up to a 3.5% cumulative annual gas load reduction by 2017, starting at 0.25% in the first year of the program and increasing throughout until the cumulative reduction is reached.

Separately from therm reduction, the projected greenhouse gas reductions based on these 2007 gas efficiency targets were incorporated into the 2007 Climate Protection Plan. That plan requires the City to reduce its greenhouse gas emissions to 90% of the 2005 level by 2020 and CPAU’s gas efficiency programs are accountable for 7,300 metric tonnes of CO2 reduction in 2020.

In August 2010, the GULP was updated to include a strategy of ensuring deployment of all feasible, cost-effective energy efficiency measures by:

(a) Developing and implementing a revised ten-year gas efficiency plan every three years that includes a reasonable carbon price premium for traditional gas supplies; and

(b) Considering the impact (costs, benefits, and GHG emissions) of substituting electricity-using appliances for gas-using appliances and vice versa as a factor in revising the ten-year gas efficiency plan

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To meet the goals and implement the GULP strategy above, a 10-year Gas Energy Efficiency Proposal is currently being developed and will be presented to Council for review and approval in 2011. The new targets will be established by taking into account gas efficiency achievements between 2008 and 2010, including the gas savings from the solar water heating program.

Water Efficiency Goals

The guiding document for the water utility efficiency programs has been the 2005 Urban Water Management Plan (UWMP), which establishes goals for calendar rather than fiscal years. This UWMP is currently undergoing a revision that will be presented to the UAC and Council in 2011. The UWMP is updated every five years and outlines the long-term supply and demand-side issues and policies impacting the water utility. Until that revised Plan is approved, the primary water reduction goals are the Council-mandated 20% water use reduction by 2020 and the 2005 plan goal that efficiency programs will reduce water purchases by 4% by the year 2030. The current annual goal for calendar year 2010 is a cumulative savings of 2.6% over projected water use.

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ACHIEVEMENTS In Fiscal Year 2010: Energy and Water Efficiency

ACHIEVEMENTS In Fiscal Year 2010: Energy and Water Efficiency ::

Achievements

CPAU achieved its efficiency goals for all three utilities in FY 2010. Additionally, the Ten-Year Electric Efficiency Plan update was adopted by the City Council in May 2010. A similar update to the Ten-Year Gas Efficiency Plan is expected to be delivered to the UAC and Council before early 2011. The Urban Water Management Plan is being revised for 2011 and meanwhile, efforts in the water DSM program have been expanded to help meet long-term water conservation goals.

DSM Program Activity and Savings Summary CPAU currently offers incentives and assistance programs to every customer class to promote efficiency improvements in electric, gas and water use. The chart below summarizes the FY 2010 savings goals and achievement for all of these programs. To put this year’s goals in comparison to past years, see the charts in the sections below on each commodity.

Commodity Savings Goal Achievement % of Load Commodity Savings % of Load

Electricity 0.31% 6,,586, 928 kWh 0.55% Gas 0.32% 106,479 therms 0.40% Water 0.34% 67.03 ccf 1.35%

Renewables Implementation Goal Achievement

Solar Electric PV Systems Solar Water Heating Sys.

650 kW 30 systems

313 kW 7 systems

Electric

The amount of FY 2010 savings varied by customer class and end use. About 90% came from the commercial sector and 10% from the residential sector. Over half of the residential savings came from refrigerator upgrades and recycling, while 30% came from lighting upgrades. About 50% of business savings came from lighting upgrades.

Goals and Achievements as a Percentage of Total Annual Electricity Sales

Year Annual Savings Goal Savings Achieved

FY 2008 0.25% 0.56% FY 2009 0.28% 0.47% FY 2010 0.31% 0.55% FY 2011 0.60% in progress

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In a comparison of electric efficiency in FY 2010, the California Municipal Utility Association (CMUA) reported that the majority of publicly-owned utilities (POUs) efficiency reductions came from lighting programs. In contrast, Palo Alto has achieved more of its savings from efficiency programs targeting other end uses. For further comparisons, the graph below from the CMUA report shows average savings by all end uses for publicly-owned utilities. Unfortunately, this report is only available for electric utilities, so there are no similar comparisons of Palo Alto with other POU’s in regard to gas and water savings.

2009 California POU Programs’ Electric Savings for all Customers by End Use

Comprehensive10%

Heating, Ventilation & Air

Conditioning12%

Other (including Pool Pumps,

Appliances, etc.)4%

Consumer Electronics

1%

Industrial Processes &

Motors8%

Lighting65%

Source: 2010 CMUA Status Report

Gas

About 45% of FY 2010 efficiency savings came from residential customers. The majority of these residential savings came from shell (insulation) and space heating upgrades—33% and 29%, respectively. The remaining 55% of savings came from business customers with nearly one third resulting from one new construction rebate to incent the customer for exceeding the City’s Green Building Program requirements. Another third of business savings came from a single project to upgrade a large customer’s heating plant.

Goals and Achievements as a Percentage of Total Annual Gas Sales

Year Annual Savings Goal Savings Achieved FY 2008 0.25% 0.11% FY 2009 0.28% 0.49% FY 2010 0.32% 0.40% FY 2011 0.40% in progress

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Water

About 83% of water conservation achievements came from business customers, primarily due to three installations of weather-based controllers on large business irrigation systems. Most residential water savings came from incentives to purchase new efficient washing machines.

Goals and Achievements as a Percentage of Total Annual Water Sales

Year Annual Savings Goal Savings Achieved FY 2008 0.34% 0.72% FY 2009 0.34% 0.98% FY 2010 0.34% 1.35%

Customer-Side Renewable Generation (Not in the Renewable Portfolio Standard)

CPAU has programs to incent customers to install both solar electric or photovoltaic (PV) and solar water heating (SWH) systems. Both programs are governed by state law in regard to development, implementation and administration. These customer-side generation systems are not included in the utility’s Renewable Portfolio Standard (RPS) supply requirements.

In the chart below showing CPAU’s record in meeting State renewables use goals, note that the extremely high amount of kilowatts installed in Fiscal Year 2007 to 2008 was due to the Roche Biosystems nearly one megawatt PV system. Also, PV installations have slowed in the last couple of years, primarily due to the economic conditions. Solar water heating systems have consistently been behind the goals set by the program. This is primarily due to the higher than expected upfront costs of the systems.

Goals and Achievements for Solar Electric (PV) and Solar Water Heating (SWH) Year Program Renewables Goals

(State Law SB1) Number of Systems; Generation Achieved

FY 2008 PV 650 kW 85 Systems; 1,347 kW SWH 0 0 Systems FY 2009 PV 650 kW 57 Systems; 340 kW SWH 30 12 Systems FY 2010 PV 650 kW 53 Systems; 313 kW SWH 30 7 Systems

Greenhouse Gas Reduction

The City’s Climate Protection Plan includes electric and natural gas efficiency goals for CPAU to achieve to assist the City in meeting its sustainability goals. As seen in the table below, CPAU significantly exceeded the electric efficiency goal, but made limited progress towards the other goals, primarily because gas upgrades are expensive to make and paybacks are longer. Solar water heating system installations are far below goals in the Climate Protection Plan.

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Achievements Versus Goals for Green House Gas Emission Reductions

Program 2020 Goal

CO2 Tonnes Reduced 2010 Achievement

CO2 Tonnes Reduced Electric Efficiency 15,800 6,022Solar Electric (PV) 3,800 1,113Natural Gas Efficiency 7,300 1,536Solar Water Heating 1,500 12

All Programs Summary Report for the period July 1, 2009 to June 30, 2010 Savings

Program # of Applicants

Rebate $ Issued*

Gross kWh/Year

Peak kW

Therms/ Year

CCF/ Year

Efficiency Programs

Residential Smart Energy 3,109 $127,403 626,145 0 35,462 REAP (low income) 57 $46,792 121,798 0 3,613 Residential Water 1,083 $76,902 6,682 11,616 Commercial Advantage 68 $385,986 2,992,717 188 37,391 Right Lights+ 33 $282,036 2,207,349 365 1,989Large Business Program (Enovity) 4 $80,780 503,600 141 18,080

Commercial Refrigeration (NRM) 7 $67,688 131,839 0 0 Commercial Water 227 $44,079 3,480 3,262 55,414Efficiency Subtotal: 4,588 $1,111,666 6,586,928 694 106,479 67,030

Renewable Programs

Solar Water Heat Res. 12 $12,926 - 0 1,514 Solar Water Heat Com. 0 $ - - 0 0 PV Partners 53 $780,8631 344,000 2152 0 Palo Alto Green Members 5,981 $ - - 0 0Renewable Subtotal: 6,052 $793,789 344,000 0 1,514 0

Total: 10,640 $1,905,455 6,930,928 694 107,993 67,030*This figure does not reflect costs for audits, direct installation services, nor program administration fees.

1 Includes performance based incentives paid for system installed before this reporting period 2 The installed PV capacity was 215 kilowatts, but does not likely contribute to peak demand savings

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Energy and Water Efficiency as a Resource

The goal of programs promoting efficiency is to save money by avoiding the purchase of new supplies. As CPAU continues to increase efficiency goals and to expand programs into less cost-effective areas, the costs for efficiency programs has continued to increase over the past three years. Supply resources have been added to Public Benefit Funds, and this trend will continue, as approved in the Ten Year Electric Energy Efficiency Plan.

A summary of the cost to purchase future supplies compared to the cost to increase efficiency on a unit basis are in the table below:

Fiscal Year:

FY 2008 FY 2009 FY 2010

20 Year Forward Prices

Efficiency Efficiency Efficiency Supply

Water $/CCF $ 3.49 $ 4.57 $ 3.07 $ 3.69

Gas $/therm $ 0.74 $ 0.50 $ 0.41 $ 0.91

Electric $/kWh $ 0.029 $ 0.0465 $ 0.0638 $ 0.11

Expansion of Programs During the past three years, CPAU has expanded the number and variety of efficiency programs in all utilities and for all customer classes. From residential usage information and comparison in the Home Energy Reports to industrially-focused process, natural gas, and chiller programs through the Commercial and Industrial Energy Efficiency Program, there are many more ways for customers to access efficiency measures than ever before. In addition, funding has been significantly enhanced for ongoing programs that were found to be cost-effective, such as the Right Lights+ energy saving program for small businesses and the Santa Clara Valley Water District water conservation programs, so their reach could be expanded. For the upcoming year, further additions to the DSM programs portfolio are being solicited through a Request for Proposals process.

See Appendix A for a more complete listing of all DSM program activities.

Expenditures To achieve its aggressive resource efficiency goals, Palo Alto has expended about $22 million for demand-side management (DSM) during the 7 years between 2003 and 2010. For FY 2010, about $6 million was spent from public benefit and supply funds. CPAU estimates that it will spend a similar amount in FY 2011 from the operating budget and transfers from reserves. Of

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this $6 million, $4.8 million is from electric public benefit and supply funds, about $800,000 is from natural gas public benefit funds, and just under $500,000 is from water DSM funds. The DSM budget breakdown is:

o Energy efficiency and water conservation measures (53%) o Renewable energy, e.g. solar photovoltaic and water heating programs (31%) o Low income programs (4%) o Research and development (R&D) programs (1%) o Program administration, including evaluation and measurement (6%) o Large commercial customer (key accounts) support for efficiency, billing, and other

management activities (just under 5%)

Total expenditures have more than doubled in the past five years, and budgets are expected to continue to increase for these programs given CPAU’s mandate to meet the customers’ supply needs by first reducing demand through cost-effective efficiency measures. Total FY 2010 Expenditures were almost $4.7 million. CPAU programs help customers get the most for their utility dollar, reduce their demand for electricity, natural gas and water and reduce greenhouse gas emissions. Note that the renewable energy programs reported in the DSM budget are the customer-side photovoltaic and solar water heating systems rebated through the utility. By state law requirements, these programs are not included in the renewable portfolio standard (RPS).

An overall summary showing the multi-year trends of program expenditures in a functional breakout, combining all three utilities, is shown in the chart below.

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DSM Program Expenditures

- 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000

2009-2010

2008-2009

2007-2008

2006-2007

2005-2006

2004-2005

2003-2004

R&D Efficiency Renewable Energy Low Income Admin Key Accts

Note that expenditures for FY 2010 include contracted encumbrances for third party programs. Some of these funds may not be spent until future years.

DSM Program Overview A complete listing of all DSM and renewable energy programs is in Appendix A. However, the following programs are being called out to emphasize their more significant contribution to CPAU’s overall DSM achievements in FY 2010. (Savings are “first year” and will continue for the life of the installed measures). In particular, note that the most effective energy-saving programs have been the Commercial Advantage and Commercial Right Lights+ programs. In addition to continuing with these and other current programs, CPAU is seeking proposals (RFP issued October 2010) for expanding the range of program offerings.

An explanation of the difference between gross and net savings is in the General Program Notes section below.

Residential Smart Energy Program:

Purpose: improving residential electric and gas use efficiency through rebates Primary Expenditure: $127,403 in rebates Customer Impact: 4,416 upgrades to appliances, equipment and home shells, including 2,056 Compact Fluorescent Light (CFL) and Light Emitting Diode (LED) bulbs, 114 heating and cooling systems and 94 insulation installations, 1,350 appliances, 52 water heaters and 10 pool pumps. CPAU also replaced 740 holiday incandescent light strands with high-efficiency LEDs. Savings: Electric---626,145 kWh (gross) and 500,916 kWh (net).

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Natural gas---35,462 therms

Residential Energy Assistance Program:

Purpose: improving low-income residential electric and gas use efficiency at no cost Primary Expenditure: $168,189 in direct subsidies to contractors Customer Impact: 57 low-income homes received lighting and shell upgrades Savings: Electric---121,798 kWh (gross) and 97, 438 kWh (net)


Residential Green@Home:

Purpose: improving residential electric, gas and water use efficiency through in-home audits Primary Expenditure: $60,000 in direct subsidies to contractor Customer Impact: 88 residential home energy audits completed (performed by volunteers) Savings: No immediate savings result from the audits themselves; however, customers received personalized advice on specific ways to reduce their water and energy costs.

Residential--Santa Clara Valley Water District (SCVWD) Program

Purpose: improving residential water use efficiency in partnership with the SCVWD through rebates and audits Primary Expenditure: $76,902 in rebates and $26,530 in reimbursed audit and administrative fees Customer Impact 1,151 residents provided with services including indoor and outdoor home water-use audits (340), rebates for toilets (229), washing machines (514), landscape upgrades (61) and evapotranspiration (ET) controllers for irrigation systems (7). Savings: Water---11,616 CCF (almost 8.7 million gallons)


Commercial Advantage Program

Purpose: improving business electric, gas and water use efficiency through rebates Primary Expenditure: $385,986 in rebates Customer Impact: 68 customers received rebates for lighting upgrades, wall and ceiling mounted motion sensors, LED exit signs, boilers, pipe insulation, variable frequency drives, PC power management software, night covers for display cases, anti-sweat heater controls, auto-closers for cooler doors, window film, new construction projects and custom electric and natural gas saving projects. Savings: Electric---2,992,717 kWh (gross) and 2,797,054 kWh (net)


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Right Lights+ Program

Purpose: improving small business’ electric efficiency through installation and rebates Primary Expenditure: $282,036 in rebates; $466,288 in subsidies to contractor (Ecology Action) to perform audits, supply products and arrange contractors to complete work. Customer Impact: 30 customers received onsite audits and efficiency rebates on a variety of lighting, sensors and commercial kitchen upgrades as well as for door gaskets, LED exit signs, vending machine controls, strip curtains for coolers and customized projects. Savings: Electric---2,207,349 kWh (gross) and 1,765,879 kWh (net)


Commercial Refrigeration (NRM): $68,183

Purpose: improving business’ electric efficiency through installations and rebates Primary Expenditure: $67,668 in rebates and $515 in third-party administrator fees (NRM) Customer Impact: 7 business customers with commercial kitchens were given rebates for equipment upgrades with longer paybacks, such as walk-in cooler controls and motors, LED case lights and LED lights for walk-in coolers. Savings: Electric ---131,839 kWh (gross) and 105,471 kWh (net)

Commercial and Industrial Energy Efficiency Program

Purpose: improving large business electric and gas efficiency through audits and rebates Primary Expenditure: $337,930 for third-party contractor assistance with system replacements (Enovity) Customer Impact: 4 large commercial customers replaced systems including an air cooled chiller, various controls, linear fluorescents, occupancy sensors, boilers and insulation on a steam distribution system. Savings: Electric---503,600 kWh (gross) and 402,880 kWh (net)


Commercial--Santa Clara Valley Water District (SCVWD) Program

Purpose: improving business water use efficiency with the SCVWD through audits and rebates Primary Expenditure: $44,079 in rebates, $43,462 for direct installations and $35,700 for business audits and administrative fees. Customer Impact: 265 business customers received services that included indoor and outdoor audits, irrigation audits and rebates for toilets (193), washing machines (16), landscape conversions (10) and evapotranspiration (ET) controllers for irrigation systems (3). Savings: Water---55,414 CCF (almost 41.5 million gallons) Electric---3,480 KWh (gross)


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GENERAL PROGRAM NOTES AND UPDATES

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GENERAL PROGRAM NOTES AND UPDATES ::

General Program Notes and Updates

Net versus Gross Electric Savings Nationwide, most electric utilities are required to include the effect of free-riders and spillover effects when calculating savings. Free-riders are those customers who would have made the efficiency improvement whether or not the utility had the program, so the utility’s program can not “take credit” for this savings. Spillover effects are those environmental benefits (and costs) that make a difference even on those not directly involved in a program. California utilities are required to reduce gross program savings by a net-to-gross (NTG) ratio. The typical NTG ratio in California is 0.8. The reported, or net savings, is thus about 80% of the total program, or gross, savings. In other states, the NTG ratio can be greater than 1, which accounts for spillover effects, when customers make energy efficient choices without participating in the utility programs. For example, in Vermont, the NTG ratio for CFL programs is over 1.2, which takes into account the spillover effects. California law does not allow use of this higher NTG ratio that includes spillover effects for reporting savings.

Evaluation, Measurement and Verification To meet the requirements of state law, CPAU contracted with a third party consultant---Navigant, formerly Summit Blue, and its subcontractor Energy Market Innovations, Inc.---to provide evaluation, measurement and verification services (EM&V) for the public benefits programs. The EM&V effort covers both impact evaluation, which measures the program-induced energy savings, and process evaluation, which assesses the program implementation procedures to identify areas for improvement. The consultant completed its second report for the FY 2009 electric efficiency programs in early 2010.

CPAU has a number of energy efficiency and renewable energy programs in both the residential and non-residential sectors. About 70% of the savings achieved comes from businesses and therefore the impact evaluation efforts for FY 2008-2009 were centered on non-residential projects. In addition to impact evaluation, the consulting team also performed process evaluation focusing on Smart Energy (residential) and Right Lights+ (small business) Programs.

Results from the impact evaluation show a realization rate of 90% (ratio of verified energy savings to claimed energy savings) for the Commercial Advantage Program and a realization rate of 85% for the Right Lights+ program. The report also provides recommendations to improve the realization rate for these two programs. Evaluation efforts for the FY 2010 gas and electric programs are currently underway and are expected to be completed in early 2011.

Research and Development Projects During FY 2010, CPAU began working on a variety of research and development projects. Demand response, electric vehicle, and smart metering/smart grid projects are all being reviewed for development within the Utilities Department. The DSM staff may become involved to a greater extent with these programs as they get closer to implementation.

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APPENDICES

APPENDICES

Appendices

Those who want to delve deeper into CPAU’s DSM program costs and achievements may find the following appendices useful:

Appendix A: Current CPAU DSM Program Descriptions

Appendix B: Discussion of Technologies and Summary of Savings Achievements by End Use Categories

Appendix C: Comparative Chart of Past and Current DSM Expenditures

Appendix D: Statewide Energy and Water Use Breakdowns by Utility and Customer Class

Appendix E: Analysis and Listing of NON-Cost-Effective Program Measures

Appendix F: Electric DSM Report to CMUA for their report to the California Energy Commission

Appendix G: Relevant City Council and Legislative Mandates

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APPENDICES

Appendix A: Current CPAU DSM Program Descriptions

Customer Class Program Name Admini-strator

Description

Residential Electric, Water, and Gas

Smart Energy program

Utility Marketing Staff (UMS) Staff in CPAU

Rebate customers for purchasing and installing energy efficient appliances, insulation, power strips, solar attic fans, furnaces, variable speed pool pumps, water heaters, and other items.

Residential Electric Refrigerator Recycling JACO

Rebate customers $35 for an old working refrigerator. Unit recycled. Program in place since 2006.

Residential Electric, Gas, Water

Residential New Construction Rebate

UMS Staff Rebate customers who exceed City’s Green Building Ordinance up to $900.

Residential Electric and Gas

Home Energy Reports

OPOWER

Written and on-line reports comparing residents’ energy usage to neighbors. Program began in November 2010 and partially funded by the Energy Efficiency Conservation Block Grant program of the Americans Recovery and Reinvestment Act (Stimulus Funds).

Residential Electric and Gas

Low Income Residential Energy Assistance Program (REAP)

Synergy

Free energy audit with recommendations are given for energy saving measures. Replacements and repairs are made to insulation, weather stripping, lighting, refrigerators, and furnaces (if needed). Program has been in place since 2005.

Residential Electric, Gas, and Water

Residential Home Energy Audit

Aclara On-Line energy audit of household energy and water use. Contract ended in October 2010, as it was replaced by the Home Energy Reports.


Green@Home Acterra

Acterra provides free in-home energy audits and electric meter information (blue line monitors). The Green@Home audits have been delivered since 2008. This program sends a two-person team of volunteers to visit resident’s homes for a 2.5 hour audit. Some homes receive a Blue Line Energy Monitor which provides in-home information on electricity use and cost.


Training and workshops

Various Contractors and Staff

Workshops on energy and water conservation issues for the public.

Residential Water Water Conservation Programs

SCVWD Work with Santa Clara Valley Water District to ensure customers receive audits and rebates for water conservation projects.

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APPENDICES

Small Business Electric and Gas

Right Lights+ Ecology Action

Contractor performs energy audit on facility, recommends changes, assists customer in making upgrades, and completes paperwork for rebate. This program has been in place since 2006.

Business Electric and Gas

Commercial Advantage Program (CAP)

UMS Staff

Rebates on installation of energy efficient equipment: lighting, HVAC, chillers, boilers, food service, refrigeration, office equipment & custom savings.

Business Electric, Gas and Water

Business New Construction Rebates

UMS Staff Rebates for new construction exceeding City and state energy requirements.

Business Electric Data Center Efficiency Program

UMS Staff Rebates for server virtualization and other data center efficiency measures.

Business Electric Energy Efficiency Financing

Quest

Zero interest loans for business customers to install efficient equipment. To begin in early 2011. Program is being developed by contractor and staff with outside legal review.


Commercial & Industrial Energy Efficiency Program

Enovity

Commissioning and installation assistance for large businesses installing efficiency measures. This program has been in place since 2009 and is available for customers with buildings larger than 30,000 square feet and/or greater than 50 kW maximum electric demand.


Efficiency Programs for Commercial Kitchens

National Resource Mgmt

Direct installation assistance for efficiency measures in commercial kitchens. This program was started in 2008 and targeted to commercial kitchens, but it will be ended in June 2011, as the contractor has determined that insufficient potential is available in Palo Alto.

Business Water Water Conservation Programs

SCVWD

Work with Santa Clara Valley Water District to ensure customers receive audits, rebates, and direct installation services for water conservation projects.

Business Electric, Gas, and Water

Training Various contractors and staff

Various training and workshops for business customers.


Large Customer Facility Manager Meetings

UMS Staff & Others

Training on a variety of efficiency measures, from chillers to LEED certification on buildings.


MeterLinks Automated Energy

On-Line access to metered utility usage for large customers. This program has been in place since 2002.

24

APPENDICES

RENEWABLE PROGRAMS

All Customers Electric

PV Partners UMS Staff

Rebates for installation of solar electric (PV) systems. As of June 30, 2010 there are 402 PV installations in Palo Alto with the total capacity of 2.563 megawatts (1.4% of system peak load).

All Customers Electric

PaloAltoGreen 3Degrees Supports wind and solar generation by purchasing renewable energy credits equivalent to a customer’s energy usage.

All Customers Gas

Solar Water Heating

UMS Staff with Center for Sustainable Energy

Rebates for installation of solar water heating systems. There are 19 systems installed. Of these, 12 were installed in the last fiscal year, totaling 1,514 therms in annual savings. Residents are paid up to $1,500 and business customers can get up to $100,000, depending on system performance. Rebates are set at a similar level to those provided to customers of the IOU statewide program.

All Customers Electric and Gas

Ground Source Heat Pump

UMS Staff Provide information on ground source heat pump systems.

25

APPENDICES

Appendix B: Discussion of Technologies and Summary of Achievements by End Use Categories

Residential Energy (Gas and Electric) Lighting: Lighting is by far the most cost-effective electric technology for a residential efficiency retrofit and has the largest potential for savings. Compact Fluorescent Lights (CFLs) are now relatively inexpensive and provide significant electricity savings. Particularly for lights in use more than three hours per day, payback is quick. Due to the large savings from CFLs and the low upfront additional or incremental cost, many utilities rebate CFLs, even though over the next three years, the law will evolve to require this to become standard for residents.

CPAU residential lighting programs include Green@Home CFLs, low income CFLs, fluorescent tube lights, and fixtures, and incenting new technology light emitting diode (LEDs) bulbs and LED holiday lights. Also in development is a CFL flood/specialty lights rebate.

Appliances: Refrigerators are typically the only appliance for which it is cost-effective for electric utilities to provide fiscal incentives for efficiency improvements. Refrigerators operate year-round, and older appliances can easily use five to ten times the electricity of a newer model. While replacing any refrigerator over 15 years old is a good efficiency measure for residents to take, the relative cost difference between a new standard refrigerator and a more efficient ENERGY STAR® certified one is relatively small. For this reason, rebates for refrigerators and other appliances are typically low.

Rebates are paid for ENERGY STAR certified refrigerator, washing machine, and dishwasher purchases, as well as for a few electric water heaters. The rebates for washing machines and dishwashers are cost-justified for the utility because of both natural gas and water savings. Customers are also rebated for having an old, working refrigerator or freezer recycled through the City’s contractor.

Insulation and Shell (weatherization, windows, ducts, etc): Due to the relatively mild year-round climate in Palo Alto, most shell improvement measures are not cost-effective in terms of electric savings, but some are cost-justified based on natural gas savings). Insulation, especially in the ceiling or on the roof, provides the fastest payback for natural gas savings and home comfort improvement. Costs are generally low, and the improvement in the home’s shell is fairly significant, particularly with older homes that have little or no insulation. Other shell upgrades, such as duct sealing, weatherization or window replacement, can result in natural gas savings. However, paybacks vary dramatically in these measures, as the cost varies from a few dollars for a bottle of caulk to thousands of dollars for window replacements.

For example, the calculated savings for window replacements from single pane to double pane in Climate Zone 4 (in which Palo Alto is located) is four kilowatt hours (kWh) per year for each

26

APPENDICES

100 square feet of window with a clear pane and 24 kWh with a tinted pane in a Single Family Residence. At the custom rebate of $0.10 per kWh for first year savings, this would justify a rebate of $0.004 per 100 square feet of clear windows replaced and $0.24 per 100 square feet of tinted windows. Since the cost to replace a window is in the hundreds of dollars, payback can be as long as 50 or more years for a window replacement.

Cooling: Since Palo Alto has very few hot hours per year, incenting new installations of even the most efficient residential air conditioning is not cost-effective. Residents are incented to replace an older, less efficient central air conditioner with a new ENERGY STAR certified model. In addition, customers receive education about fans and other less expensive cooling technologies, as opposed to air conditioners, which use a lot of energy and are harmful to the environment.

Space Heating: The largest end use for residential natural gas in many homes is for space heating. The majority of space heating in Palo Alto is through natural gas—boilers to heat water in radiant floor heating and from a variety of furnace types. Due to the cost and inconvenience of making the upgrade and relatively low energy savings from newer equipment, most residents do not upgrade their furnaces until the end of the equipment’s life. Some local homes have heating systems that are 50 years or older, and the equipment is slowly being replaced. Rebates for these systems have provided the largest amounts of natural gas savings over the past several years.

Solar Water Heating: The second largest use for natural gas for most residents is water heating. The initial purchase price of solar water heaters is high compared to standard models, but they can be cost-effective. As a result of natural gas savings, operating costs can be reduced up to 90%. Solar water heating systems require a conventional water heater as a backup to ensure hot water is available when solar energy is not. Palo Alto’s rebate for solar water heating is still fairly new (2008); however, as more residents and contractors are trained on the program over the next several years, increased customer involvement is expected.

Other Water Heating: Customers who upgrade washing machines to front loaders or other models use much less water, and since some of that water is heated, the majority of the savings come from reduced water heating needs. In addition, replacing water heaters with more efficient models yields energy savings, although the savings are often relatively small, especially in comparison to the plumbing costs for installation. Some residents do achieve savings with tankless water heaters. For tankless systems, water circulated through a large coil is heated only on demand using gas or electricity; there is no storage tank maintaining hot water. A possible concern with this technology is the limitation on the number of fixtures that can use hot water at the same time. Also, because there is an endless supply of hot water, some customers actually use more natural gas with this technology.

27

APPENDICES

Smart Energy Residential Program Installations and Savings; FY 2010

28

Measure Units Annual kWh

Savings*

Annual Therm

Savings* Lighting CFL Bulb 81 7,371 - LED Holiday Lights 740 17,760 - LED Novicomm 988 36,556 - LED Pharox 987 39,480 - Subtotal Lighting 2,796 101,167 -

HVAC Boiler 15 - 3,000Central AC More Efficient (SEER 14) 3 1,017 - Central AC Most Efficient (SEER 15) 8 3,336 - Gas Furnace 88 - 7,392Subtotal HVAC 114 4,353 10,392

Shell Attic Insulation More Efficient (R-30) 45 16,980 6,042Attic Insulation Most Efficient (R-38) 19 7,292 2,618Flat Roof Insul. More Efficient ( R19) 3 510 267Wall Insulation 27 4,860 2,700Subtotal Shell 94 29,642 11,627

Appliances Clothes Wash More Efficient (Tier 2) 41 6,027 697Clothes Wash Most Efficient (Tier 3) 487 81,816 9,253Dishwasher 36 1,584 144Dishwasher More Efficient (CEE Tier 1) 19 627 30Dishwasher Most Efficient (CEE Tier 2) 243 9,720 462Refrigerator 351 42,471 - Refrigerator Recycling 173 336,658 - Subtotal Appliances 1,350 478,903 10,586

Water Heater Tankless Water Heater 13 - 1,690Water Heat Electric 3 537 - Water Heat Gas More Efficient (Tier 0) 14 - 238Water Heat Gas More Efficient (Tier 1) 1 - 29Water Heat Gas Most Efficient (Tier 2)) 21 - 1,197Subtotal Water Heater 52 537 3,154

APPENDICES

Other Pool Pumps 10 14,000 0Subtotal Other 10 14,000 0Total Smart Energy Program 4,416 628,602* 35,759*

Low Income Residential Assistance Program (REAP)

Measure Units Recipients kWh

Savings* Therm

Savings*

Lighting REAP - CFL Replacement 479 55 33,530 - REAP - Hardwire Interior Lights 175 53 19,600 - REAP - Hardwire Porch Light 65 22 14,170 - REAP - T8 Delamp Conversion 92 40 50,766 - Subtotal Lighting 811 118,066 0 HVAC REAP - Furnace Filter 3 3 3 - Subtotal HVAC 3 3 0 Shell REAP - Attic Access Weatherstripping 6 6 11 6REAP - Attic Insulation 10,123 6 2,834 1,518REAP - Caulking MFR Windows etc. 24 24 46 24REAP - Caulking SFR Windows etc 15 15 29 15REAP - Door Weather-Stripping 103 53 309 412REAP - Duct Test & Seal 4 4 500 96

REAP - Programmable Thermostat 3 3

- 228

Subtotal Shell 10,278 3,729 2,299 Water Heating REAP - Faucet Aerator 117 51 - 351REAP - Low Flow Showerhead 59 43 - 413REAP - Water Heater Blanket 10 10 - 550Subtotal Water Heating 186 0 0 1,314 Total REAP Low Income Program 11,278 0 121,798 3,613*Savings by end use is based on original gross savings estimates and differs slightly from final reported net savings by program delivered to the CEC.

29

APPENDICES

Non-Residential (Commercial & Industrial) Energy (Gas and Electric)

Lighting: Lighting technology improvement is the most cost-effective efficiency retrofit for a business. Payback periods are typically less than three years, the savings are assured for the long-term when fixtures are installed, and energy savings are all year-round, including during peak times which is especially beneficial to the utility.

Current commercial lighting programs include rebates (both prescriptive and custom) and direct installation programs to replace T12 fluorescent tubes with T8’s and remove lamps when not needed, replace exit signs with LED fixtures and incandescent lights with compact fluorescent bulbs, install LED case lighting in coolers, install Bi-Level lighting and occupancy sensors in low use areas (stairwells and parking garages), install metal halide lights where appropriate, and install/repair lighting control systems.

HVAC: Replacing heating, ventilating, and air conditioning (HVAC) equipment can provide savings for a business, particularly if their current system is over 15 years old. However, installation of the new equipment can be quite expensive, especially for large systems. Payback periods remain long, even after a utility incentive equal to the differential between a standard and more efficient new item. For these reasons, HVAC equipment is typically replaced at the end of the life of current equipment (“burn out”).

Current business HVAC programs include rebates (both prescriptive and custom) and advise/assistance programs to replace chillers/cooling towers, air conditioners, variable frequency drives (VFDs), and pumps, as well as to reset control settings and manage operations.

Other: There are many specialized areas of business where energy savings can be cost-effective. Commercial kitchens, grocery stores, and “quickie” marts often use large amounts of energy and have relatively poor regular maintenance programs. Other businesses have processes that can be improved to achieve greater energy efficiency.

Due to the relatively quick payback of restaurant and kitchen programs and the low cash flow position of these customers, CPAU has emphasized these direct install and rebate programs. Other efficiency measures include replacement of steam hoods, motors, refrigeration systems/appliances and gaskets/strip curtains in commercial kitchens. CPAU has implemented programs to assist other businesses include upgrading business computing to more efficient technologies and to help in design and construction of more efficient buildings.

Water Heating: Palo Alto businesses have saved the most natural gas by replacing and upgrading boilers and water heating equipment. Much of this equipment in current office spaces is old and reaching the end of its useful life. In addition, water quality regulations have required some of the larger firms to upgrade boilers to meet new standards.

30

APPENDICES

Residential Water

The water utility is required to report its efficiency savings to the California Urban Water Conservation Council under various categories of “Best Management Practices (BMPs).” See the chart at the end of the water section for a listing of CPAU Achievements relative to these BMPs.

High Efficiency Toilets: Replacing an older toilet with a high efficiency one can save 22 gallons per day (single family residence) to 43 gallons per day (multi-family residence). Given that the replacement cost is relatively low and older units often leak, payback periods for residents who install these toilets can be very short.

Washing Machines: High-efficiency residential washing machines can save nearly 6,500 gallons per appliance per year over old models, in addition to the natural gas savings from heating less hot water. Given the penetration of older technology machines in the community, there is a large water and natural gas savings potential in replacing washing machines. As costs for the newer machines come down, payback periods for customers continue to get shorter.

Landscaping: Given that 40 to 50 percent of residential water consumption goes towards irrigating landscaping, replacing high water using plants with native or Bay Friendly landscaping can result in significant water savings. However, payback periods can be longer for the residents as the cost to retrofit a landscape can be high.

Nonresidential (Commercial & Industrial) Water High Efficiency Toilets and Urinals: Replacing an older technology toilet or urinal with a high efficiency unit saves about 46 gallons of water per day. Given the number of older toilets in commercial facilities, the total savings potential from this technology is high. Cost of installation for new fixtures is low, giving customers a very quick payback and subtantial water savings for the utility.

Landscaping: Replacing high water use landscaping (turf lawn) with native or Bay Friendly plants and improving irrigation system efficiency can save an average of 800 to 1,500 CCF per acre per year. Given the sizes of some of the commercial campuses in Palo Alto, savings for this program can be significant. Payback is longer for existing facilities, as the cost to retrofit a landscape can be high.

Other Technologies: Many commercial customers have the capability to change processes or chiller technology to use less water. These new Water Efficient Technologies are custom developed and rebates are paid based on actual water savings.

31

APPENDICES

Water programs are reported under their Best Management Practice (BMP) category to the California Urban Water Conservation Council (CUWCC) on a bi-annual basis. The program involvement for FY 2010 is shown below.

Item FY 2010 Best Management Practice (BMP1): Water Wise House Calls

Single Family Dwelling (SFD) Completed 278 Multi-Family Dwelling (MFD) completed 62

Showerhead installed 93 Aerators Installed 65 Flappers Installed 7

Water Savings (gallons per year) 1,017,280

BMP5: Weather (ET) Controller Rebate Residential 7

Small Commercial 3 Large Commercial -


BMP2: Residential High Efficiency Toilet (HET) Rebate

SFD Installation Rebates 229 Water Savings (gallons per year) 692,543,518

BMP5: Landscape Survey Program

Irrigation Audits Performed 18 Water Savings (gallons per year) 10,771,200

BMP9: Business (CII) & MFD HET Installation

CII HET Installations 176 MFD HET installations 17


BMP6: CII Clothes Washer RebateTotal Installed 16

Water Savings (gallons per year) 512,000

BMP6: Resi Clothes Washer RebateTotal Installed (Tier 3) 514 Total Installed (Tier 2) -


32

APPENDICES

BMP9: CII Indoor Water Audits Total CII Sites Audited 22

Est. Water Savings (gallons per year) 23,071,312

BMP5: Water-Efficient Landscape ConversionNumber of Retrofits (Residential & Commercial) 71

Square Feet of Turf Removed 146,098 Est. Water savings (gallons per year) 3,599,001

Pre Rinse Spray Valve (CPAU funded)

Total Installed 3 Water Savings (gallons per year) 219,000 TOTAL WATER SAVED (GAL) PER YEAR 50,138,421 TOTAL THERMS SAVED 9,944 TOTAL PROGRAM EXPENDITURES $ 220,923

Water savings represented 0.34% of total water sales in FY 2010.

33

APPENDICES

Appendix C: Comparative Chart of Past and Current DSM Expenditures

For comparison purposes, the costs by utility and program function from FY 2004 through FY 2010 are provided in the chart below.

Historical Costs by Utility and Program Fiscal Year 2004 2005 2006 2007 2008 2009 2010 Total

Electric PBC Admin

128,020 129,288 164,141 81,470 140,215 384,312 144,887 1,172,333

Electric DSM

1,199,220 1,094,768 792,852 728,930 1,049,958 1,566,757 2,668,403 9,100,890

Electric Renew.

205,002 258,025 1,504,726 1,126,506 1,219,982 1,210,982 1,446,874 6,972,097

Electric Cust Accts

103,983 61,297 6,170 38,726 17,832 290,110 259,339 777,456

Electric R&D

78,682 8,526 7,774 19,145 4,354 8,543 45,100 172,123

Electric Low Inc

- 1,993 - 132,117 148,169 168,189 121,811 572,277

Subtotal 1,714,908 1,553,896 2,475,663 2,126,894 2,580,509 3,628,892 4,686,413 18,767,176 Gas PBC Admin

1,575 196 4,449 41,179 86,914 52,131 3 186,447

Gas DSM 113,548 190,934 41,603 119,135 125,052 215,489 766,811 1,572,572 Gas Cust Accts

6,866 13,596 5,411 12,359 3,846 53,841 44,834 40,754

Gas R&D - - 4,763 12,380 9,769 13,626 11,000 51,538 Gas Low Income

- - - 50,549 56,256 83,597 62,676 253,078

Subtotal 121,990 204,726 56,225 235,602 281,836 418,684 885,324 2,204,388 Water Efficiency

54,075 30,974 61,592 66,802 211,460 331,315 447,624 1,203,842

Water Cust Accts

6,214 5,989 7,256 7,865 17,509 57,521 28,572 130,926

Subtotal 60,289 36,963 68,848 74,667 228,968 388,836 476,196 1,334,768Total $1,897,187 $1,795,585 $2,600,737 $2,437,163 $3,091,314 $4,436,413 $6,047,934 $22,306,332

34

APPENDICES

Appendix D: Statewide Energy and Water Use Breakdown By Utility and Customer Class

Residential Energy Use The state completes a thorough analysis of the equipment used by residential and commercial customers every three to four years. This information is further broken down by Climate Zone (Palo Alto is in Climate Zone 4, immediately adjacent to Climate Zone 3).

As shown in the latest data available, residential customers use the most electricity for lighting, refrigeration, and electronic equipment. Natural gas usage is concentrated in space and water heating. Break-downs of statewide residential and commercial electric and natural gas consumption patterns by end-use category are shown below.

Figure D1 : California Break-down of Residential Electric Use

Statewide Electricity Use Per Household 5,914 kWh Each

Light (est.), 22%

Refrig. & Freezer, 19%

TV, PC, Office, 15%

Air Condition, 10%

Pool & Spa, 6%

Dishwash & Cook, 5%

Laundry, 5%

Space Heat, 4%

Water Heat, 3%

Misc., 11%

Source: Residential Appliance Saturation Study (RASS) 2004

35

APPENDICES

Figure D1 : California Break-down of Residential Gas Use

Statewide Gas Use Per Household

Space Heat, 44%

Water Heat, 44%

Cooking, 7%

Dryer, 3%

Pool, Spa, Misc., 3%

Source: Residential Appliance Saturation Study (RASS) 2004

Nonresidential Energy Use

Nonresidential electric usage is dominated by lighting, cooling, and refrigeration. Natural gas usage is concentrated in space and water heating, as for residents.

Figure D3: Statewide Commercial Electric Usage

California Commercial Building Electricity End Use

Interior Lighting, 28.7%

Exterior Lighting, 5.8%

Office Equipment, 7.1%

Misc., 5.8%

Process, 0.3%

Motors, 4.2%

Air Comp., 1.0%

Heating, 1.6%

Cooling, 14.9%

Ventilation, 11.9%

Refrigeration, 13.4%

Water Heating, 0.9%

Cooking, 4.2%

Source: Commercial Energy Use Survey 2006

36

APPENDICES

Figure D4: Statewide Commercial Gas Usage

California Commercial Building Gas End Use

Water Heat, 31.8%

Cooking, 22.6%Misc., 1.8%

Process, 5.9%

Heating, 36.4%

Cooling, 1.5%

Source: Commercial Energy Use Survey 2006

Residential Water Use The largest uses for residential water usage are for the landscape, washing laundry, and toilets, with faucets and showers/baths closely following toilets in typical end use. Nine percent of the average residential consumption of water is for leaks.

Figures D5: Statewide Average Water Usage

California Residential Average Water Use

Toilets, 11%

Bath, 1%

Shower, 9%

Faucets, 10%

Dishwasher, 1%

Laundry, 12%

Other, 8%Leak, 9%

Irrigation, 39%

Source: 2009 Version of the Decision Demand Side Management Least Cost Planning Decision Support System developed by Maddaus Water Management

37

APPENDICES

Nonresidential Water Use

About one third of the water used in Palo Alto is for commercial, industrial, and public buildings. Much of this water, particularly for parks and large business campuses, is used for landscaping; however, water is also used for toilets and faucets or process applications.

Figure D6: Water Use by Customer Class in Palo Alto

Palo Alto Customer Water Use

Residential, 62%

Commercial & Industrial, 29%

City & Public, 9%

38

APPENDICES

Appendix E: Analysis and Listing of Non-

Cost-Effective Program Measures Staff regularly reviews programs to determine which ones are not cost-effective and thus should not be included in the efficiency portfolio. This enables CPAU to meet the objective as expressed in a Council Colleague’s Memo (May 3, 2010), which directed the Utilities Advisory Commission to identify the rate of energy efficiency penetration where additional cost or program management is no longer preferable to purchasing renewable energy supplies. The charts below are provided for readers who may have an interest in specific measures and want to understand why they are not part of our programs.

Programs are first reviewed by commodity (electricity, natural gas, and water). Some programs, such as washing machines, are not cost-effective for any individual commodity, but are effective programs when looking holistically at all utility efficiency areas. Summaries are given below by utility to show measures that have been found to be not cost-effective along with the related total resource cost test, where cost-effective programs have a Total Resource Cost (TRC) benefit-to-cost ratio of greater than one. Costs and benefits to implement programs are computed on a societal basis. The lower the TRC ranking, the less cost-effective the program. In general, programs must have a benefit-to-cost ratio greater than 1.0 to be implemented.

There are four generally accepted cost-effectiveness tests for energy efficiency programs. The cost-effective perspective can be from the point of view of the society (TRC), the utility, the program participant or all utility customers, including those who do not participate. For EE program planning and reporting, the societal perspective is typically used; however, staff do review all four ratios when setting rebate levels.

Electric-Nonresidential:

In the program listing below, note that all of these programs have a TRC less than 1.0 and cost more on a levelized basis than purchasing supply. In these cases, the programs would generally not be added to incent the installation of this equipment.

Measure Total

Resource Cost

Levelized Cost/kWh

Food Store: Package system A/C (>=63.3 tons, 10.2 EER) 0.47 0.33 Office: Large Vat Fryer 0.67 0.23 Health Facility/Hospital: Large Vat Fryer 0.67 0.23 Food Store: Large Vat Fryer 0.67 0.23 Misc: Large Vat Fryer 0.67 0.23 Office: Package system A/C (>=63.3 tons, 10.2 EER) 0.87 0.18 Office: Convection Oven 0.90 0.17

39

APPENDICES

Health: Convection Oven 0.90 0.17 Food Store: Convection Oven 0.90 0.17 Misc: Convection Oven 0.90 0.17 Health: Package system A/C (>=63.3 tons, 10.2 EER) 0.97 0.16 Misc: Package system A/C (>=63.3 tons, 10.2 EER) 0.99 0.15

Electric-Residential:

Measure Total

Resource Cost Test

Levelized Cost/kWh

SF - Exist: Ground Source Heat Pump 0.05 $ 3.0991 Multi-Family: Ground Source Heat Pump 0.05 $ 3.0992 Res - New: Ground Source Heat Pump 0.05 $ 3.0993 SF - Exist: Dishwasher– Average 0.07 $ 2.1169 Multi-Family: Dishwasher– Average 0.07 $ 2.1170 Res - New: Dishwasher– Average 0.07 $ 2.1171 SF - Exist: Whole House Fan with Air Conditioning 0.08 $ 2.0657 Multi-Family: Whole House Fan with Air Conditioning 0.08 $ 2.0658 SF - Exist: CEE Tier 3 - Split AC 16 SEER (13 EER) 0.09 $ 1.8590 SF - Exist: Clothes Washer 0.18 $ 0.8714 Multi-Family: Clothes Washer 0.18 $ 0.8715 Res - New: Clothes Washer 0.18 $ 0.8716 SF - Exist: Ceiling Insulation, existing plus new to R-38 0.19 $ 0.8260 Multi-Family: Ceiling Insulation, existing plus new to R-38 0.19 $ 0.8261 Multi-Family: 19-21 SEER A/C Split System, Average 0.21 $ 0.7554 Res - New: 19-21 SEER A/C Split System, Average 0.21 $ 0.7555 SF - Exist: Duct Sealing 0.27 $ 0.6045 Multi-Family: Duct Sealing 0.27 $ 0.6046 SF - Exist: Wall Insulation, R-13, blown-in 0.37 $ 0.4358 Multi-Family: Wall Insulation, R-13, blown-in 0.37 $ 0.4359 SF - Exist: Solar Hot Water Heater, replacing electric 0.68 $ 0.2137 Multi-Family: Solar Hot Water Heater, replacing electric 0.68 $ 0.2138 Res - New: Solar Hot Water Heater, replacing electric 0.68 $ 0.2139 SF - Exist: Hot Water Heater, electric high efficiency heater 0.95 $ 0.1594 Multi-Family: Hot Water Heater, electric high efficiency 0.95 $ 0.1595 Res - New: Hot Water Heater, electric high efficiency heater 0.95 $ 0.1596

Total Electric Portfolio:

Due to the increasing requirements to enhance electric energy efficiency programs and to use these programs as the first resource when looking at supply needs, electric energy efficiency programs continue to reach into less cost-effective areas. This has resulted in a cost-

40

APPENDICES

effectiveness benefit-cost ratio (Total Resource Cost or TRC) for the entire portfolio that has gotten lower over time. As the TRC goes under 1.0, programs are no longer cost-effective, as CPAU is promoting less cost-effective programs. The cost to deliver programs was higher in FY 2008, primarily due to set-up charges for new efficiency programs.

Fiscal Year Net 1st Year kWh TRC (Above 1 is Cost-Effective)

Total Resource Cost per kWh

FY 06-07 4,710,731 2.83 $0.08 FY 07-08 5,162,474 2.43 $0.15 FY 08-09 4,667,711 2.45 $0.06 FY 09-10 5,266,354 1.92 $0.07

Natural Gas- Nonresidential

The following program areas were determined by the gas energy efficiency potential model to be not cost-effective. A Total Resource Cost test of less than one is not cost-effective.

Measure TRC (Above 1 is

Cost-Effective for NG)

Cost per Therm

G2 Commercial (no MF): Solar Water Heat 0.26 3.485G3 Large Commercial: Solar Water Heat 0.26 3.486G2 Commercial (no MF): Combination Oven 0.56 1.645G3 Large Commercial: Combination Oven 0.56 1.645G2 Commercial (no MF): Power Burner Conveyor Belt Oven - Gas 0.57 1.607G3 Large Commercial: Power Burner Conveyor Belt Oven - Gas 0.57 1.607G2 Commercial (no MF): Solar Water Heat 0.68 1.345G2 Commercial (no MF): Convection Gas Oven 0.68 1.353G3 Large Commercial: Convection Gas Oven 0.68 1.353G2 Commercial (no MF): Efficient Griddle - Gas 0.83 1.101G3 Large Commercial: Efficient Griddle - Gas 0.83 1.101G2 Commercial (no Multi-Family or MF): Gas Boiler Tune-up 0.88 1.035G3 Large Commercial: Gas Boiler Tune-up 0.88 1.035G6 Municipal: Gas Boiler Tune-up 0.88 1.035

Gas-Residential

Measure TRC (Above 1 is Cost-Effective for

NG)

Cost per

Therm ($)

Single-Family: Replacement Window at U25 Rating 0.08 10.893 Multi-Family: Replacement Window at U25 Rating 0.08 10.893

41

APPENDICES

Multi-Family: Duct Sealing/Repair 12% Leakage 0.18 5.091 Single-Family: Passive Solar Water Heat 0.20 4.589 Single-Family: Duct Sealing/Repair 12% Leakage 0.34 2.700 Multi-Family: Condensing Water Heater 0.45 2.041 Single-Family: Condensing Water Heat Energy Factor (EF) 0.54 1.703 Multi-Family: Efficient Dishwasher - .75 EF 0.60 4.196 Single-Family: Efficient Dishwasher - .75 EF 0.64 3.494 Single-Family: Wall Insulation Upgrade at R13 Rating 0.65 1.405 Multi-Family: Wall Insulation Upgrade at R13 Rating 0.65 1.405 Multi-Family: Clothes Washer – Most Efficient (Tier 3 >= 2.2 MEF) with electric or no dryer 0.82 7.551 Multi-Family: Low Flow Shower 0.88 1.034 Multi-Family: Clothes Washer – Most Efficient (Tier 3 >= 2.2 MEF)-with gas dryer 0.89 4.564 Single-Family: Clothes Washer – Most Efficient (Tier 3 >= 2.2 MEF) with electric or no dryer 0.99 6.259

Water-Residential and Non-Residential

Measure Name

Present Value of Total

Community Benefits Over

30 Years

Total Community

Benefit- Cost Ratio

Rebates on Commercial Urinals $ 65,350 0.08Regulations on New Development (Outdoor) $ 1,234,400 0.13Replace inefficient water using equipment $ 72,925 0.14Promotion of water efficient plantings at new homes $ 49,370 0.23Incentives for retrofitting sub-metering $ 34,124 0.47Incentives for replacement of washers in coin-operated laundries $ 29,763 0.49Education/Training External Water Use Efficiency $ 572,590 0.60Require sub-metering in multifamily units $ 530,683 0.63Replacement of Residential ULF Toilet $ 142,509 0.82Classes--Homeowner irrigation $ 777,436 0.85

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APPENDICES

Appendix F: Electric DSM Report to CMUA for its report to the California Energy Commission

The information below will be included with a California Municipal Utilities Association report to the California Energy Commission. The report, required by state law, shows the success of Palo Alto’s efficiency programs in reducing electric consumption; this report does not include natural gas or water programs. Efficiency programs are required to be the first resource used by the electric utility. The programs are also required to be cost effective, which in state terms means that the programs achieve a Total Resource Cost (TRC) score of at least 1.0. Palo Alto’s programs are cost-effective with an effectiveness ratio two times the state’s required level.

Palo Alto Resource Savings Summary

Program Sector (Used in CEC Report)

Units Install

Net Demand Savings

(kW)

Net Peak kW

Saving

Gross Annual

kWh Savings

Net Annual

kWh Savings

Net Lifecycle

kWh Savings

Net Lifecycle

GHG Reduce (Tons)

Res Clothes Washers 528 5 5 87,843 70,274 702,744 388Res Cooling 11 1 1 4,353 3,482 62,683 40Res Dishwashers 298 2 2 11,931 9,545 124,082 69Res Heating 7 2 2 503 402 7,202 4Res Lighting 3,607 444 382 219,233 175,386 2,482,133 1,325Res Pool Pump 10 8 4 14,000 11,200 112,000 62Res Refrigeration 524 47 47 379,129 303,303 5,459,458 2,962Res Shell 10,367 2,445 2,445 30,414 24,331 483,761 273Res Water Heating 3 537 430 2,148 1Res Comprehensive 17 Non-Res Cooling 267 20 20 309,007 247,206 3,313,998 1,777Non-Res Heating Non-Res Lighting 6,520 469 444 2,853,737 2,282,990 21,999,851 12,190Non-Res Refrigeration 2,472 172 63 935,041 748,033 5,220,633 2,799Non-Res Shell 8,988 14 14 152,796 122,237 1,222,368 680Non-Res Process Non-Res Comprehensive

1,514,924 1,514,924 1,211,939 1,211,939 674

T&D Other 379 3 8 73,480 58,784 307,840 168Total 1,548,922 3,630 3,438 6,586,928 5,269,542 42,712,840 23,412

EE Portfolio TRC 1.92

TRC is Total Resource Cost Test where a score greater than 1 equals benefits are greater than costs for society. TRC for FY 08/09 Programs was 2.45 TRC for FY 07/08 Programs was 2.43

43

44

APPENDICES

APPENDIX G: State and City Mandates Controlling Program Goals and Implementation Title Description

CMR 431:05 & 455:05 2005 Urban Water Management Plan

CMR 158:07 Long Term Electric Acquisition Plan (LEAP)

CMR 211:07 Climate Protection Plan

CMR 216:07 2007 Ten Year Energy Efficiency Plan

CMR 435:07 Climate Protection Plan

CMR 134:08 Gas Utility Long Term Plan (GULP)

CMR 218:10 2010 Ten Year Electric Energy Efficiency Plan; approved in May 2010

CMR 212:10 Approval of a Goal to Have a 20% Reduction of Water Use by 2020

AB 1470 (2007) Establishes the Solar Water Heating and Efficiency Act of 2007. Requires the governing body of each publicly owned utility providing gas service to retail end-use gas customers, to adopt, implement, and finance a solar water heating system incentive program.

AB 1890 (1996) Requires electric utilities to fund low-income ratepayer assistance programs, public purpose programs for public goods research, development and demonstration, demand-side management and renewable electric generation technologies

SB 1037 (2005) Requires each local publicly owned electric utility, in procuring energy, to first acquire all available energy efficiency and demand reduction resources that are cost-effective, reliable, and feasible. Requires each local publicly owned electric utility to report annually to its customers and to the Energy Commission (CEC), its investment on energy efficiency and demand reduction programs.

AB 1881 (2006) Requires cities and counties, no later than January 1, 2010, to adopt the updated Model Water Efficient Landscape Ordinance developed by the Department of Water Resources (DWR) or an equivalent ordinance which is “at least as effective as” the DWR Model Ordinance in reducing landscape water usage. Requirements include enforcing water budgets, planting and irrigation system specifications to meet efficiency criteria.

AB 2021 (2006) Requires the CEC on or before November 1, 2007, and every 3 years thereafter, in consultation with the commission and local publicly owned electric utilities, to develop a statewide estimate of all potentially achievable cost-effective electricity and natural gas efficiency savings and establish statewide annual targets for energy efficiency savings and demand reduction over 10 years.

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