CenterPoint Oklahoma Demand Programs Annual Report 2016

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2 CenterPoint Oklahoma Demand Programs Annual Report 2016 March 31, 2017

3 Executive Summary : (c)(1): Demand Programs by Category : (c)(2): Programs and Date Started : (c)(3): Participation : (c)(4-6): Projected & Actual Energy Savings : (c)(7): Education Programs : (c)(8): Levelized Cost : (c)(9): Reduced Emissions and Water Consumption : (c)(10): Portfolio Budget & Total Annual Gas Revenue : (c)(11): Portfolio Energy Savings & Annual Gas Usage : (c)(12): Projected Program Costs : (c)(13): Actual Program Costs : (c)(14-15): Incentives : (c)(16): Utility growth or reduction : (c)(17): Market Conditions : (c)(18): Summary of Spending by Demand Program : (c)(19): Funds Planned versus Funds Expended : (c)(20): Description of Each Demand Program : (b)(21): Research and Development Activities : (c)(22): Program Implementers Conclusion

4 Executive Summary On October 7, 2010, CenterPoint Energy Resources Corp. d/b/a CenterPoint Energy Oklahoma Gas ( CenterPoint Oklahoma or the Company) proposed a comprehensive portfolio of Conservation Improvement Programs ( CIP, and as a whole, the CIP Portfolio ) in response to the Oklahoma Corporation Commission s ( OCC or the Commission ) Rules for Demand Programs, OAC 165: et seq. On March 25, 2011, the Commission approved the program portfolio in Order No in Cause No. PUD , and CenterPoint Oklahoma began to implement the program portfolio thereafter in On February 1, 2012, the Commission approved modifications and additions to the Company s previously approved CIP portfolio in Order No in Cause No. PUD On August 13, 2013 the Commission approved an updated CIP portfolio for program years in Order No in Cause No. PUD This report is filed in response to the Commission s reporting requirements specified in OAC 165: , which requires the Company to report the performance of its energy efficiency programs for the preceding program year. Consistent with the requirements, this report will outline the activities and results of the Company s CIP Portfolio performance for the 2016 program year. CenterPoint Oklahoma implemented and administered the following CIP programs in 2016: CenterPoint Energy Education Program (CEEP) - Program educates residential (RS-1) and commercial (GS-1 & CS-1) customers about their energy usage and provides lowcost to no-cost tips on how to conserve energy. Residential Home Energy Reports An educational and behavioral change program providing individualized information and recommendations regarding energy usage through Home Energy Reports sent to 30,000 CenterPoint Oklahoma customers. The direct mail Home Energy Reports utilize energy usage data with customer demographic, housing and GIS data to develop specific, targeted recommendations that educate and motivate customers to reduce their energy consumption. Water Heating - Program provides inducements ranging from $50 to $250 to residential and commercial customers that purchase and install energy efficient natural gas water heaters. CenterPoint Oklahoma also provides a $900 inducement to customers who switch from electric resistance water heating to a more efficient natural gas water heating solution. Plumbers that install gas tankless systems for a natural gas water heater upgrade or an electric to natural gas conversion receive a $50 trade ally incentive for every qualifying inducement. In 2014, CenterPoint Oklahoma began offering a $15 trade

5 ally incentive for plumbers that install a high efficiency natural gas storage tank water heater. In November of 2012, CenterPoint Oklahoma expanded the Water Heating program to include Direct Installation of low-flow pre-rinse spray valves and faucet aerators for commercial customers. Beginning in 2014, the direct installation of low-flow equipment for commercial customers was moved into the newly implemented Natural Gas Commercial Solutions Program. Space Heating Systems - Program provides inducements ranging from $125 to $400 to residential and commercial customers that purchase and install energy efficient natural gas space heating equipment. s that switch from electric resistance heating and heat pumps to a more efficient natural gas furnace as their primary heating source receive a $2,000 inducement. HVAC contractors receive a $50 trade ally incentive for every qualifying inducement. In 2014, CenterPoint Oklahoma began offering a $25 inducement for qualifying furnace tune-ups and a $5 trade ally incentive for each tune-up. Low-Flow Showerhead and Faucet Aerator - Provides residential customers with free low-flow showerhead and faucet aerator kits that, when installed, will conserve water, reduce energy usage, and save customers money. Commercial Boiler - Encourages commercial customers to install efficient natural gas boilers via inducements ranging from $1,400 to $2,000 per MMBTU for the purchase of qualified new energy efficient boilers. Additionally, inducements are available for the purchase and installation of boiler components, such as burner replacements, controls and vent dampers. Commercial Food Service - Promotes the reduction of natural gas energy usage for commercial food service customers via inducements ranging from $150 to $1,000 for the purchase and installation of new energy efficient food service equipment. Trade ally inducements are also available at $50 per qualifying food service inducement. Multi-Unit Market Transformation Promotes efficient water heating and space heating solutions to multi-unit developers through inducements ranging from $100 to $2,000. Trade ally rebates are also available at $50 for qualified equipment installations. Clothes Dryer Provides a $450 rebate to qualified residential customers for the purchase and installation of natural gas dryers. A $50 trade ally incentive is also available for each qualifying inducement. 2

6 Electronic Ignition Hearth Provides a $75 inducement to residential customers for the installation of a fireplace, insert, or free standing stove with electronic ignition. A $15 trade ally incentive is also available for each qualifying inducement. Cooking Range Provides a $300 inducement to residential customers who replace electric cooking ranges with more efficient natural gas ranges. In addition, a $50 trade ally incentive is offered to encourage trade allies to stock and sell natural gas cooking ranges. New Home Construction Provides a $750 inducement to customers or builders who construct new homes equipped with efficient natural gas appliances. Residential Energy Audit Program Provides an on-site energy efficiency evaluation for the homes of residential customers. s agree to make a $100 co-payment to cover a portion of the audit cost. Natural Gas Commercial Solutions Program Provides financial incentives to commercial customers for implementing cost effective energy efficiency solutions at their facilities. The program contains the following components: Direct-Install Measures target small to mid-size customers. It is a turnkey equipment replacement program designed to reduce customer energy usage costs through the installation of low-flow pre-rinse spray valves, faucet aerators, showerheads, and weather-stripping. Custom Measures target GS-1 and CS-1 commercial and industrial customers. Projects identified will be eligible for custom incentives based on final program design, after applying documented and defensible calculated energy savings. Since the programs began in 2011, more than 25,000 participants per year have saved an aggregate total of 358,000 MCF of annualized natural gas savings. In 2016, CenterPoint Oklahoma again experienced growth in its CIP Portfolio and delivered another record year of program energy savings. The portfolio of programs produced annualized net energy savings of 87,269 Mcf. This growth in cost-effective energy savings produced a net economic benefit of $2,448,194. Key drivers of program growth and success in 2016 include: Continued growth in Space Heating and Water Heating programs CenterPoint Oklahoma followed a record year for space heating and water heating inducements in 3

7 2015, with another strong year of growth in combined energy savings for these programs totaled 19,217 Mcf, and represents a 25% increase over 2015 results. Effective Delivery of the Natural Gas Commercial Solutions Program In 2016, CenterPoint Oklahoma s Natural Gas Commercial Solutions continued to grow and exceed projections for captured energy savings. Through a combination of directinstallation measures and seven custom commercial projects, the program delivered energy savings of 17,467 Mcf. This program remains one of CenterPoint Oklahoma s most cost-effective energy efficiency offerings and provides commercial customers an excellent avenue to improve the efficiencies of their facilities. Behavioral savings provided through the Home Energy Reports The Home Energy Reports Program was again an effective tool to educate residential customers and drive behavioral changes that reduce energy consumption program net energy savings totaled 35,277 Mcf, exceeding projections for overall program savings as well as average savings per household. Figure 1: Energy Savings by Program Year 4

8 Figure 2: Net Benefits by Program Year The remainder of this report is organized according to the OCC s reporting requirements specified in OAC 165: (c) : (c)(1): Demand Programs by Category OAC 165: (c)(1): The name of Demand Program listed by Category Table 1 lists the customer categories (by class) served by each Conservation Improvement Program delivered by CenterPoint Oklahoma in Amendments made to OAC 165:45 apply to Demand Portfolios beginning in January 1, 2017 and thereafter. While this Annual Report addresses activity for the 2016 Program Year, CenterPoint Oklahoma has developed and organized the report to provide information that meets the revised reporting requirements set forth in the latest version of OAC 165:45. 5

9 Table 1: Programs & Categories Program Category CenterPoint Energy Education Program Residential Home Energy Reports Water Heating Space Heating Low Flow Showerhead and Faucet Aerator Commercial Boiler Commercial Food Service Multi-Unit Market Transformation Clothes Dryer Electronic Ignition Hearth Cooking Range New Home Construction Residential Energy Audit Natural Gas Commercial Solutions Residential, Commercial GS-1, Commercial CS-1 Residential Residential, Commercial GS-1, Commercial CS-1 Residential, Commercial GS-1, Commercial CS-1 Residential Commercial - GS-1, Commercial CS-1 Commercial - GS-1, Commercial CS-1 Residential Residential Residential Residential Residential Residential Commercial - GS-1, Commercial CS-1 165: (c)(2): Programs and Date Started OAC 165: (c)(2): a list of all programs and the date each program started. Upon OCC approval of the first CIP Portfolio on March 25, 2011, CenterPoint Oklahoma began the delivery of the following energy efficiency programs: CenterPoint Energy Education Program (CEEP) Residential Home Energy Reports 6

10 Water Heating Space Heating Systems Low-Flow Showerhead and Faucet Aerator Commercial Boiler Commercial Food Service The OCC approved a modified CIP Portfolio on February 1, 2012, and CenterPoint Energy began the delivery of the following programs for 2012: Multi-Unit Market Transformation Clothes Dryer On August 13, 2013, the OCC approved a new CIP Portfolio triennial plan for program years In January of 2014, CenterPoint Oklahoma began implementing this new triennial plan, which includes the previously-approved programs along with the following new programs and program updates: Electronic Ignition Hearth Cooking Range New Home Construction Residential Energy Audit Furnace Tune Ups (addition to Space Heating Program) 165: (c)(3): Participation OAC 165: (c)(3): The number of Participating s per Demand Program. In 2016, CenterPoint Oklahoma s programs reached 38,455 participants. 38,184 were residential program participants, and 271 participated in commercial programs. Participation counts for each program are listed in Table 2. 7

11 Table 2: Participation by Program Program 2016 Participation CenterPoint Energy Education Program N/A Residential Home Energy Reports 33,760 Water Heating 325 Space Heating System 1,067 Low Flow Showerhead and Faucet Aerator 2,936 Commercial Food Service 19 Commercial Boiler 8 Multi-Unit Market Transformation 173 Clothes Dryer 13 Electronic Ignition Hearth 0 Cooking Range 50 New Home Construction 35 Residential Energy Audit N/A Natural Gas Commercial Solutions 69 Grand Total 38, : (c)(4-6): Projected & Actual Energy Savings OAC 165: (c)(4): By Demand Program, approved projected energy savings (in dekatherms) as approved; OAC 165: (c)(5): The gross energy savings (in dekatherms) and performance of each Demand program; and OAC 165: (c)(6): The verified energy savings (in dekatherms) by Demand Program and methods used to verify. Table 3 compares the projected savings to the gross and net savings achieved in 2016 for each program. 8

12 Table 3: Projected, Gross, and Net Energy Savings by Program Program 2016 Projected Annual Savings (MCF) 2016 Annual Gross Savings Achieved (MCF) 2016 Annual Net Savings Achieved (MCF) CenterPoint Energy Education Program N/A N/A N/A Residential Home Energy Reports 21,000 35,277 35,277 Water Heating 4,087 2,440 2,111 Space Heating System 16,829 19,825 17,106 Low Flow Showerhead and Faucet Aerator 13,089 11,366 7,255 Commercial Food Service 4, Commercial Boiler 6,745 2,536 2,036 Multi-Unit Market Transformation 16,896 4,801 4,403 Clothes Dryer Electronic Ignition Hearth Cooking Range New Home Construction Residential Energy Audit N/A N/A N/A Natural Gas Commercial Solutions 14,433 19,191 17,467 Grand Total 99,378 97,344 87,269 Energy Savings and Methodology The energy savings methodologies and inputs outlined in the Arkansas Technical Reference Manual (TRM) were used to calculate energy savings for all programs resulting in energy savings. The TRM can be found on the Arkansas Public Service Commission s website. 2 All of the weather zones in CenterPoint Oklahoma s service territory are included in the TRM, so any climate differences between the two states have been appropriately taken into account

13 CenterPoint Oklahoma also modified the data and methodologies provided in the Arkansas TRM to calculate energy savings from fuel switching activities. The energy savings utilized in electric to gas applications take into account the full fuel cycle of energy and account for the source of the fuel in addition to the site emissions. The Arkansas TRM was used to calculate site and baseline emissions. For heating systems, the electric baseline was an air source heat pump (HSPF 7.7) with back-up electric resistance heating used for 15% of the heating load. For water heating systems, the standard electric water heater efficiencies were utilized. A source energy factor was applied that assumed that 27% of the electric energy produced for an energy efficiency system was actually delivered on site, compared to 90% of natural gas delivery. 3 In 2016, CenterPoint Oklahoma also made adjustments to gross energy savings based on the evaluation report completed for the Company s 2015 portfolio of energy efficiency programs delivered in Arkansas. This report, prepared by the Company s third-party EM&V contractor, is included in the CenterPoint Energy Efficiency Program Portfolio Annual Report, 2015 Program Year, filed in Arkansas Public Service Commission Docket No TF. 4 CenterPoint Oklahoma utilized the impact evaluations in this report to make adjustments (based on factors such as equipment installation rates and free-ridership rates) to the gross savings for applicable programs delivered in its 2016 Oklahoma CIP Portfolio. While the Company delivers similar energy efficiency portfolios in Arkansas and Oklahoma, and many of the programs are directly comparable from an evaluation perspective, there are some programs specific to CenterPoint Oklahoma s territory for which no applicable Arkansas evaluation data exists. For these programs, the Company applied an 80% net-to-gross ratio to calculate net energy savings. The overall net-to-gross ratio for CenterPoint Oklahoma s 2016 CIP Portfolio was 89.6%. 3 For detailed analysis and further explanation on this topic, see the Direct Testimony of Ben J. Carranza filed in Cause No. PUD at Appendix A, CenterPoint Energy Efficiency Program Portfolio Annual Report 2015 Program Year, APSC Docket No TF 10

14 165: (c)(7): Education Programs OAC 165: (c)(7): For Education Programs measurements of outreach efforts, including pre-program and post-program results and copies of evaluations, surveys, focus group results, and other measurement techniques used to gauge the effectiveness of education efforts. CenterPoint Oklahoma does not have formal evaluation data on the CenterPoint Energy Education Program for The Company plans to provide additional information for its Portfolio that will gauge the effectiveness of its education efforts in regards to program awareness, customer participation, and trade ally engagement. 165: (c)(8): Levelized Cost OAC 165: (c)(8): The levelized cost per dekatherm for the Demand Portfolio, Demand Programs, and by customer sector, including all assumptions used to make the calculation. The levelized cost for the Company s 2016 CIP Portfolio was $2.97 per Mcf. CenterPoint Oklahoma used the following methodology to calculate the levelized cost: Levelized TRC Cost = Capital Recovery Factor *(Total Program Administrator Costs + Total Participant Costs (net of incentives) Annual Energy Where: Capital Recovery Factor = [A (1 + A)^(B)]/[(1 + A)^(B) 1] A = Discount Rate (Societal Rate) B = Weighted Average Life of Savings Tables 4 and 5 provide details on the levelized cost at the program, customer sector, and portfolio levels. 11

15 Table 4: Levelized Cost by Program Total Resource Cost Test and TRC Levelized Cost By Program Net Energy Savings Annual Net Energy Savings Total Cost Total Resource Cost Test (TRC) Total Benefits Total Net Benefits TRC Weighted Measure Life TRC Levelized Cost Program Savings Type MCF $ $ $ Ratio Water Heating - Residential Natural Gas 453 $ 102,876 $ 73,258 $ (29,618) $ Water Heating - Residential Electric to Gas Fuel Switch 1,266 $ 28,784 $ 179,046 $ 150, $ 1.83 Water Heating - GS-1 Natural Gas 225 $ 7,249 $ 41,095 $ 33, $ 2.13 Water Heating - GS-1 Electric to Gas Fuel Switch 104 $ 3,515 $ 17,898 $ 14, $ 2.39 Water Heating - CS-1 Natural Gas 63 $ 4,866 $ 11,447 $ 6, $ 5.12 Water Heating - CS-1 Electric to Gas Fuel Switch 0 $ - $ - $ - NA 0.00 NA Water Heating - Total Years ($/MCF) 2,111 $ 147,290 $ 322,744 $ 175, $ 5.28 Space Heating - Residential Natural Gas 11,505 $ 495,577 $ 1,272,945 $ 777, $ 3.02 Space Heating - Residential Electric to Gas Fuel Switch 2,989 $ 95,701 $ 545,846 $ 450, $ 2.09 Space Heating - GS-1 Natural Gas 1,865 $ 100,605 $ 340,525 $ 239, $ 3.52 Space Heating - GS-1 Electric to Gas Fuel Switch 124 $ 3,841 $ 22,609 $ 18, $ 2.03 Space Heating - CS-1 Natural Gas 623 $ 45,034 $ 113,799 $ 68, $ 4.72 Space Heating - CS-1 Electric to Gas Fuel Switch 0 $ - $ - $ - NA 0.00 NA Space Heating - Total 17,106 $ 740,757 $ 2,295,723 $ 1,554, $ 2.96 Commercial Food Service - GS-1 Natural Gas 570 $ 70,574 $ 58,583 $ (11,991) $ Commercial Food Service - CS-1 Natural Gas 183 $ 17,752 $ 18,851 $ 1, $ 9.54 Commercial Food Service - Total 753 $ 88,326 $ 77,433 $ (10,893) $ Commercial Boiler - GS-1 Natural Gas 535 $ 71,952 $ 97,689 $ 25, $ 8.78 Commercial Boiler - CS-1 Natural Gas 1,501 $ 45,151 $ 274,015 $ 228, $ 1.96 Commercial Boiler - Total 2,036 $ 117,104 $ 371,704 $ 254, $ 3.76 Natural Gas Commercial Solutions - GS-1 Natural Gas 9,002 $ 120,981 $ 841,325 $ 720, $ 1.50 Natural Gas Commercial Solutions - CS-1 Natural Gas 8,466 $ 354,199 $ 1,197,530 $ 843, $ 3.32 Natural Gas Commercial Solutions - Total 17,467 $ 475,180 $ 2,038,856 $ 1,563, $ 2.53 Low Flow Showerhead/Aerator Natural Gas 7,255 $ 73,264 $ 611,589 $ 538, $ 1.17 Residential Home Energy Reports Natural Gas 35,277 $ 219,412 $ 277,243 $ 57, $ 6.39 Electronic Ignition Hearth Natural Gas 0 $ 19,165 $ - $ (19,165) NA New Home Construction Natural Gas 599 $ 42,768 $ 109,313 $ 66, $ 4.67 Energy Audit NA NA $ 13,610 NA NA NA NA NA Clothes Dryer Electric to Gas Fuel Switch 72 $ 14,236 $ 9,514 $ (4,722) $ Cooking Range Electric to Gas Fuel Switch 189 $ 14,303 $ 24,856 $ 10, $ 6.20 Multi-Unit Market Transformation Electric to Gas Fuel Switch 4,403 $ 102,520 $ 667,058 $ 564, $ 1.74 CenterPoint Energy Education Program NA NA $ 54,432 NA NA NA 0.00 NA Total Portfolio 87,269 $ 2,122,368 $ 6,806,030 $ 4,683, $

16 Table 5: Levelized Cost by Sector Net Energy Savings Total Resource Cost Test (TRC) Total Resource Cost Test and TRC Levelized Cost By Sector Sector Annual Net Energy Savings Total Cost Total Benefits Total Net Benefits TRC MCF $ $ $ Ratio Weighted Measure Life Years TRC Levelized Cost ($/MCF) Residential 64,008 $ 1,269,804 $ 3,770,666 $ 2,500, $ 2.94 Commercial GS-1 12,425 $ 383,526 $ 1,419,724 $ 1,036, $ 2.91 Commercial CS-1 10,836 $ 469,037 $ 1,615,641 $ 1,146, $ 3.30 Total Portfolio 87,269 2,122,368 $ 6,806,030 $ 4,683, $ : (c)(9): Reduced Emissions and Water Consumption OAC 165: (c)(9): The amount of reduced emissions and water consumption experienced by the utility, including all assumptions and calculation details, during the Demand Program period for the current program year. Reduced Emissions CenterPoint Oklahoma utilized the United States Environmental Protection Agency s Greenhouse Gas Equivalencies Calculator 5 to estimate the impact of reduced emissions attributable to the 87,269 in Mcf savings delivered through the 2016 CIP Portfolio. Overall, the Company s programs reduced carbon dioxide (CO 2 ) emissions by 4,775 metric tons. This is equivalent to: Greenhouse gas emissions from: 1,009 passenger vehicles driven for one year; or 11,444,190 miles driven by an average passenger vehicle

17 Carbon dioxide emissions from: Annual energy use of 504 homes; 5,095,450 pounds of coal burned; or 537,309 gallons of gasoline consumed. Reduced Water Consumption CenterPoint Oklahoma calculated the reduction in water consumption delivered through the Low-Flow Showerhead and Faucet Aerator Program. Based on the count, by weather zone, of each low-flow equipment type, an estimated annual reduction in gallons of water use was calculated. The Company then applied the same adjustments for installation rates and net-togross ratios as used to determine annual energy savings to calculate a net annual reduction in water consumption. The results of those calculations are provided in Table 6. Table 6: Reduced Water Consumption Annual Water Savings Low Flow Showerhead and Faucet Aerator Program Measure Equipment Count Gross Water Savings (Gallons Per Year) Installation Rate Net-to Gross Ratio Net Water Savings (Gallons Per Year) Showerhead 5,758 14,314, % 96.30% 9,070,369 Bathroom Faucet Aerator Kitchen Faucet Aerator 4,347 2,777, % 96.30% 1,540,775 2,880 1,074, % 96.30% 684,834 Total 12,985 18,166, % 96.30% 11,295, : (c)(10): Portfolio Budget & Total Annual Gas Revenue OAC 165: (c)(10): The Demand Portfolio funding as a percent of total annual gas revenue Table 7 displays the 2016 CIP Portfolio budget as a percentage of CenterPoint Oklahoma s 2016 revenue. 14

18 Table 7: Demand Portfolio Funding as a Percent of Total Annual Gas Revenue 2016 Portfolio Budget 2016 Revenue Demand Portfolio Funding % Total Revenue $ 2,405,524 $ 68,285, % 165: (c)(11): Portfolio Energy Savings & Annual Gas Usage OAC 165: (c)(11): The Demand Portfolio Net source energy savings as a percent of total gas annual usage Table 8 displays the 2016 CIP Portfolio net energy savings as a percentage of CenterPoint Oklahoma s 2016 natural gas throughput. Table 8: Demand Portfolio Savings as a Percent of Total 2016 Natural Gas Usage 2016 Net Energy Savings 2016 Natural Gas Usage Energy Savings % Annual Gas Usage MCF MCF 87,269 6,435, % 165: (c)(12): Projected Program Costs OAC 165: (c)(12): The projected program costs; (A) These costs should be separated into the following categories to allow review of spending (i) Administrative costs; (ii) Inducements: direct payments and other inducements (iii) Educations and marketing costs; (iv) Program delivery costs; and (v) EM&V costs Table 9 provides the 2016 budgets for each program by cost category. 15

19 Table 9: 2016 Program Budgets by Category Program Administration Inducements Education/Marketing Delivery Evaluation Total Program CenterPoint Energy Education Program Residential Home Energy Reports $0 $0 $57,705 $0 $0 $57,705 $822 $0 $0 $211,175 $391 $212,388 Water Heating $3,699 $150,615 $25,390 $18,787 $1,172 $199,664 Space Heating $11,920 $364,925 $71,554 $62,625 $6,836 $517,860 Low Flow Showerhead and Faucet Aerator $2,466 $39,891 $23,082 $41,157 $2,344 $108,940 Commercial Food Service $4,110 $34,250 $23,082 $22,962 $2,344 $86,748 Commercial Boiler $5,344 $32,690 $32,315 $25,050 $2,539 $97,937 Multi-Unit Market Transformation $2,877 $614,705 $9,233 $10,437 $391 $637,643 Clothes Dryer $822 $40,000 $4,616 $6,262 $391 $52,092 Electronic Ignition Hearth $2,055 $9,000 $9,233 $10,437 $586 $31,311 Cooking Range $822 $22,750 $4,616 $6,262 $391 $34,842 New Home Construction $2,466 $37,500 $6,925 $10,437 $586 $57,914 Residential Energy Audit $1,233 $0 $20,774 $46,262 $391 $68,660 Natural Gas Commercial Solutions $2,466 $125,369 $0 $110,764 $1,172 $239,771 Total Portfolio Budget $41,105 $1,471,695 $288,524 $582,619 $19,531 $2,403, : (c)(13): Actual Program Costs OAC 165: (c)(13): The projected program costs; (A) These costs should be separated into the following categories to allow review of spending (i) Administrative costs; (ii) Inducements: direct payments and other inducements (iii) Educations and marketing costs; (iv) Program delivery costs; and (v) EM&V costs Table 10 provides the actual 2016 expenditures for each program by cost category. 16

20 Table 10: 2016 Program Spending by Category Program Administration Inducements Education/Marketing Delivery Evaluation Total Program CenterPoint Energy Education Program Residential Home Energy Reports $0 $0 $54,432 $0 $0 $54,432 $1,118 $0 $33 $217,730 $531 $219,412 Water Heating $5,029 $92,255 $22,716 $25,706 $1,593 $147,300 Space Heating System $16,206 $481,125 $24,882 $85,716 $9,293 $617,222 Low Flow Showerhead and Faucet Aerator $3,353 $31,814 $10,811 $55,913 $3,186 $105,077 Commercial Food Service $7,265 $7,800 $16,139 $34,315 $3,452 $68,970 Commercial Boiler $5,588 $18,650 $16,300 $33,730 $3,186 $77,454 Multi-Unit Market Transformation $3,912 $247,000 $2,945 $14,207 $531 $268,595 Clothes Dryer $1,118 $5,600 $4,073 $8,514 $531 $19,836 Electronic Ignition Hearth $2,794 $0 $1,091 $14,290 $797 $18,972 Cooking Range $1,118 $17,700 $4,141 $8,514 $531 $32,003 New Home Construction $3,353 $26,250 $2,729 $14,190 $797 $47,318 Residential Energy Audit $1,676 $0 $2,889 $8,514 $531 $13,610 Natural Gas Commercial Solutions $3,353 $109,642 $0 $139,300 $1,593 $253,888 Total Program Costs $55,882 $1,037,835 $163,182 $660,638 $26,552 $1,944, : (c)(14-15): Incentives OAC 165: (c)(14): Projected incentives including projected cost effectiveness tests; OAC 165: (c)(15): Actual calculated incentives including workpapers and working spreadsheets (formulas, calculations, linkages, and assumptions) or for updated cost effectiveness tests, in sufficient detail to allow review of cost effectiveness calculations CenterPoint Oklahoma s calculated incentive requested is $406,312 based on the results of its 2016 CIP Portfolio. As approved in Order No in Cause PUD , for programs 17

21 that pass the TRC Test, CenterPoint Oklahoma is authorized to recover 15% of the qualifying program s net present value (NPV), as determined using the Utility Cost Test. For programs that do not pass the TRC, Test, the Company is authorized to collect 15% of the actual cost of such program. CenterPoint Energy does not propose to recover incentives from the delivery of fuel switching programs. Table 11 provides detail for the requested incentives by program and customer class. Table 11 Incentives by Program and Category Program 2016 Actual Costs 2016 UCT NPV Shared Savings Total Utility Rate Category Calculation TRC Benefits Incentive Incentive Residential GS-1 CS-1 CenterPoint Energy Education Program $ 54,432 N/A $ - $ - $ 8,165 $ 7,138 $ 721 $ 305 Residential Home Energy Reports $ 219, $ 57,830 $ 8,675 $ 8,675 $ 8,675 $ - $ - Res. Gas to Gas Water Heating CIP $ 67, $ (21,514) $ - $ 10,168 $ 10,168 $ - $ - Res. Low Flow Showerhead & Aerators Program $ 105, $ 372,409 $ 55,861 $ 55,861 $ 55,861 $ - $ - Res. Space Heating System - Gas to Gas $ 315, $ 501,765 $ 75,265 $ 75,265 $ 75,265 $ - $ - Res. Space Heating System - Backup $ - N/A $ - $ - $ - $ - $ - $ - Res. Pilotless Hearth $ 18, $ (18,972) $ - $ 2,846 $ 2,846 $ - $ - Res. New Home Construction $ 47, $ 18,240 $ 2,736 $ 2,736 $ 2,736 $ - $ - Res. Energy Audit $ 13,610 N/A $ - $ - $ 2,042 $ 2,042 $ - $ - GS-1 WH - Gas to Gas $ 3, $ 21,172 $ 3,176 $ 3,176 $ - $ 3,176 $ - GS-1 Space Heating - Gas to Gas $ 49, $ 154,589 $ 23,188 $ 23,188 $ - $ 23,188 $ - GS-1 Space Heating - Backup $ - N/A $ - $ - $ - $ - $ - $ - GS-1 Commercial Boilers $ 48, $ 9,835 $ 1,475 $ 1,475 $ - $ 1,475 $ - GS-1 Total Commercial Foodservice $ 53, $ (10,246) $ - $ 8,039 $ - $ 8,039 $ - GS-1 C&I Solutions $ 200, $ 438,758 $ 65,814 $ 65,814 $ - $ 65,814 $ - CS-1 Water heating Gas to Gas $ 2, $ 4,259 $ 639 $ 639 $ - $ - $ 639 CS-1 Space Heating - Gas to Gas $ 26, $ 42,115 $ 6,317 $ 6,317 $ - $ - $ 6,317 CS-1 Space Heating - Backup $ - N/A $ - $ - $ - $ - $ - $ - CS-1 C&I Solutions $ 53, $ 743,750 $ 111,563 $ 111,563 $ - $ - $ 111,563 CS-1 Commercial Boilers $ 28, $ 135,634 $ 20,345 $ 20,345 $ - $ - $ 20,345 CS-1 Commercial Foodservice $ 15, $ (1,430) $ - $ - $ - $ - $ - Total $ 1,324,050 $ 2,448,194 $ 375,053 $ 406,312 $ 164,730 $ 102,413 $ 139, : (c)(16): Utility growth or reduction OAC 165: (c)(16): The utility s annual growth or reduction in metered natural gas for the previous three years, with a calculation of the average growth or reduction rate over that entire period. CenterPoint Oklahoma s metered sales volumes are provided by customer class in Table 12. In 2010, CenterPoint Oklahoma lowered the volume threshold for transportation customers, and some of the reduction in sales volumes in the CS-1 customer class is a result of customers moving to transportation services. In addition, weather impacted heating load and accounted for much of the variance in sales volumes seen from 2014 to Table 12 displays the average rate of change in metered sales volumes from

22 Table 12: Metered Sales Volumes (CCF) per Average Rate of Change Per Year Residential 59,363,735 49,319,703 41,044, % Commercial GS-1 12,892,967 9,808,937 8,446, % Commercial CS-1 19,799,411 17,833,979 14,861, % 165: (c)(17): Market Conditions 165: (c)(17): The most current information available comparing the base line and milestones to be achieved under market transformation programs with actual conditions in the market. CenterPoint Oklahoma s delivery of its CIP Portfolio in provided valuable insights into market conditions and opportunities for energy efficiency in the Company s Oklahoma service territory. Inducements offered for space heating and water heating equipment (including electric to natural gas fuel-switching) have been very effective tools to drive efficiencies in residential and commercial buildings. Participation and trade ally engagement in these programs have grown dramatically in recent years, and the Company expects this trend to continue. However, initial participation projections for commercial prescriptive inducements (such as boilers and foodservice equipment) were higher than market conditions in the Company s service territory will likely provide. While CenterPoint Oklahoma still believes there is significant opportunity to capture cost effective energy savings through prescriptive inducements for commercial equipment, the Company s participation goals for these measures have been adjusted to better align with the market. The Company has also discontinued program and inducement offerings that did not capture significant levels of participation, such as inducements for electronic ignition fireplaces, direct vent and hydronic heating, and the Residential Energy 19

23 Audit Program. However, other residential inducement offerings that have seen limited growth and participation (such as the Clothes Dryer and Cooking Range inducements) still present significant opportunities for growth, so CenterPoint Oklahoma plans to target retailers to promote these inducements and move the market. The custom inducement component of the Natural Gas Commercial Solutions program is another area that provides excellent growth opportunities. This program has allowed CenterPoint Oklahoma to provide solutions to small commercial customers (which can be a difficult market to reach) and drive efficiencies in their buildings and processes. The Company has expanded the size of this program for the CIP Portfolio and can now target commercial transportation customers (a segment that, until 2017, has not been eligible for CIP). 165: (c)(18): Summary of Spending by Demand Program OAC 165: (c)(18): By Demand Program, provide a summary of spending, including the following: (A) Administrative Costs; (B) Inducements, including direct payments and other inducements; (C) Education and marketing costs; (D) Program Delivery Costs; and (E) EM&V Costs. Table 13 provides the actual 2016 program expenditures by cost category. 20

24 Table 13: 2016 Program Spending by Category Program Administration Inducements Education/Marketing Delivery Evaluation Total Program CenterPoint Energy Education Program Residential Home Energy Reports $0 $0 $54,432 $0 $0 $54,432 $1,118 $0 $33 $217,730 $531 $219,412 Water Heating $5,029 $92,255 $22,716 $25,706 $1,593 $147,300 Space Heating System $16,206 $481,125 $24,882 $85,716 $9,293 $617,222 Low Flow Showerhead and Faucet Aerator $3,353 $31,814 $10,811 $55,913 $3,186 $105,077 Commercial Food Service $7,265 $7,800 $16,139 $34,315 $3,452 $68,970 Commercial Boiler $5,588 $18,650 $16,300 $33,730 $3,186 $77,454 Multi-Unit Market Transformation $3,912 $247,000 $2,945 $14,207 $531 $268,595 Clothes Dryer $1,118 $5,600 $4,073 $8,514 $531 $19,836 Electronic Ignition Hearth $2,794 $0 $1,091 $14,290 $797 $18,972 Cooking Range $1,118 $17,700 $4,141 $8,514 $531 $32,003 New Home Construction $3,353 $26,250 $2,729 $14,190 $797 $47,318 Residential Energy Audit $1,676 $0 $2,889 $8,514 $531 $13,610 Natural Gas Commercial Solutions $3,353 $109,642 $0 $139,300 $1,593 $253,888 Total Program Costs $55,882 $1,037,835 $163,182 $660,638 $26,552 $1,944, : (c)(19): Funds Planned versus Funds Expended 165: (c)(19) A statement of any funds that were committed but not spent during the year, by program, with an explanation for non-spending. CenterPoint Oklahoma s 2016 CIP Portfolio costs reached 81% of the approved budget, with planned portfolio spending of $2,403,474, and actual program expenditures totaling $1,944,089. Expenditures in the Multi-Unit Market Transformation Program increased from program year 2015 but still reached just 42% of the budget as the number of completed, eligible 21

25 Multi-Unit developments was less than forecasted when the program inducement budget was adjusted in CenterPoint Oklahoma continues to see a strong pipeline of planned Multifamily developments, but these projects have a lengthy planning and construction cycle, making it difficult to forecast the number of units that will be completed in any given year. The Space Heating Program (at 119% of projected spend) again exceeded the program budget due to increased customer participation, and the total spending of $617,222 through this program was the highest expenditure of the 14 programs delivered in CenterPoint Oklahoma s Water Heating Program exceeded participation projections but only reached 74% of budget, largely due to a high number of tank water heater inducements as opposed to tankless water heater inducements that are incentivized at a higher level. The New Home Construction program posted strong growth in 2016, exceeding 2015 participation and energy savings totals and reaching 82% of projected spending. Spending in The Residential Home Energy Report Program (103% of budget), the Low-Flow Showerhead and Faucet Aerator Program (96% of budget) and the Natural Gas Commercial Solutions Program (106%) were very close to projected expenditures. Participation numbers were lower than projected in the smaller residential prescriptive programs. Combined spending for the Natural Gas Clothes Dryer, Natural Gas Cooking Range, Electronic Ignition Fireplace, and Residential Energy audit programs totaled 54% of the total budgeted spending for those respective programs. Two of these programs, the Electronic Ignition Fireplace and the Residential Home Energy Audit are no longer offered in Despite efforts to promote and grow these programs, participation remained low throughout CenterPoint Oklahoma s program delivery cycle, and the Company determined that energy efficiency spending would be better utilized toward other program offerings that will produce cost-effective energy savings and deliver value for customers. 22

26 Table 14: Budgeted Funding and Actual Expenditures by Program Program Program Funds Budgeted Program Funds Expended CenterPoint Energy Education Program $ 57,705 $ 54,432 Residential Home Energy Reports $ 212,388 $ 219,412 Water Heating $ 199,664 $ 147,300 Space Heating $ 517,860 $ 617,222 Low Flow Showerhead and Faucet Aerator $ 108,940 $ 105,077 Commercial Food Service $ 86,748 $ 68,970 Commercial Boiler $ 97,937 $ 77,454 Multi-Unit Market Transformation $ 637,643 $ 268,595 Clothes Dryer $ 52,092 $ 19,836 Electronic Ignition Hearth $ 31,311 $ 18,972 Cooking Range $ 34,842 $ 32,003 New Home Construction $ 57,914 $ 47,318 Residential Energy Audit $ 68,660 $ 13,610 Natural Gas Commercial Solutions $ 239,771 $ 253,888 Total Program Costs $ 2,403,474 $ 1,944,089 23

27 165: (c)(20): Description of Each Demand Program 165: (c)(20): A detailed description of each Demand Program reflecting the scale of the program as part of the Demand Portfolio that includes the following: (A) Number of customers served by each Demand Program or program category; (B) Program or program category expenditures; (C) Verified energy and peak demand savings achieved by the Demand Program or program category, when available; and (D) A description of proposed changes in the Demand Program plans. Detailed information related to 2016 expenditures, participation, energy savings, overall program scale, as well as recent or proposed changes is provided below for each program: CenterPoint Energy Education Program (CEEP) CEEP is an education and awareness program and has no directly attributable energy savings associated with program implementation. Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio Residential $ - $ - $ 47,589 $ - $ - $ 47, % GS-1 $ - $ - $ 4,810 $ - $ - $ 4, % CS-1 $ - $ - $ 2,033 $ - $ - $ 2, % Total $ - $ - $ 54,432 $ - $ - $ 54, % CenterPoint Oklahoma continues to implement the CEEP in its 2017 CIP Portfolio and does not propose any major changes to the program at this time. 24

28 Residential Home Energy Reports Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings Residential 33,760 35, % 35, % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio Residential $ 1,118 $ - $ 33 $ 217,730 $ 531 $ 219, % CenterPoint Oklahoma continues to implement the Residential Home Energy Reports Program in its 2017 CIP Portfolio. No major changes to the program are proposed at this time, but as discussed in the Company s Demand Portfolio filing (Cause No. PUD ) CenterPoint Oklahoma plans to utilize more communications in addition to the reports mailed to customers. 25

29 Water Heating Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings Residential 306 2, % 1, % GS % % CS % % Total 325 2, % 2, % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio Residential $ 4,397 $ 85,400 $ 19,860 $ 22,474 $ 1,393 $ 133, % GS-1 $ 444 $ 5,590 $ 2,007 $ 2,271 $ 141 $ 10, % CS-1 $ 188 $ 1,265 $ 849 $ 960 $ 60 $ 3, % Total $ 5,029 $ 92,255 $ 22,716 $ 25,706 $ 1,593 $ 147, % CenterPoint Oklahoma continues to offer inducements for water heating equipment in its 2017 CIP Portfolio, but as discussed in the Company s Demand Portfolio filing (Cause No. PUD ), CenterPoint Oklahoma s water heating and space heating inducements have been combined into one program beginning in

30 Space Heating Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings Residential , % 14, % GS , % 1, % CS % % Total 1,067 19, % 17, % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio Residential $ 14,168 $ 405,625 $ 21,754 $ 74,940 $ 8,125 $ 524, % GS-1 $ 1,432 $ 54,450 $ 2,199 $ 7,574 $ 821 $ 66, % CS-1 $ 605 $ 21,050 $ 930 $ 3,202 $ 347 $ 26, % Total $ 16,206 $ 481,125 $ 24,882 $ 85,716 $ 9,293 $ 617, % CenterPoint Oklahoma continues to offer inducements for space heating equipment in its 2017 CIP Portfolio, but as discussed in the Company s Demand Portfolio filing (Cause No. PUD ), CenterPoint Oklahoma s water heating and space heating inducements have been combined into one program beginning in

31 Low-Flow Showerhead and Faucet Aerator Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings Residential 2,936 11, % 7, % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio Residential $ 3,353 $ 31,814 $ 10,811 $ 55,913 $ 3,186 $ 105, % CenterPoint Oklahoma continues to implement the Low-Flow Showerhead and Faucet Aerator Program in its 2017 CIP Portfolio and does not propose any major changes to the Program at this time. 28

32 Commercial Foodservice Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings GS % % CS % % Total % % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio GS-1 $ 5,735 $ 5,300 $ 12,741 $ 27,090 $ 2,725 $ 53, % CS-1 $ 1,529 $ 2,500 $ 3,398 $ 7,224 $ 727 $ 15, % Total $ 7,265 $ 7,800 $ 16,139 $ 34,315 $ 3,452 $ 68, % CenterPoint Oklahoma continues to deliver the Commercial Foodservice Program in its 2017 CIP Portfolio. As discussed in the Company s Demand Portfolio filing (Cause No. PUD ), CenterPoint Oklahoma has expanded the suite of equipment that is eligible for inducements and adjusted the inducement and trade ally incentives offered for several types of high-efficiency foodservice equipment. 29

33 Commercial Boiler Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings GS % % CS-1 3 1, % 1, % Total 8 2, % 2, % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio GS-1 $ 3,493 $ 12,000 $ 10,187 $ 21,081 $ 1,991 $ 48, % CS-1 $ 2,096 $ 6,650 $ 6,112 $ 12,649 $ 1,195 $ 28, % Total $ 5,588 $ 18,650 $ 16,300 $ 33,730 $ 3,186 $ 77, % CenterPoint Oklahoma continues to deliver the Commercial Boiler Program in its 2017 CIP Portfolio, and does not propose any major changes in the program at this time. 30

34 Multi-Unit Market Transformation Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings Residential 173 4, % 4, % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio Residential $ 3,912 $ 247,000 $ 2,945 $ 14,207 $ 531 $ 268, % CenterPoint Oklahoma continues to deliver the Multi-Unit Market Transformation Program in its 2017 CIP Portfolio, and does not propose any major changes in the program at this time. 31

35 Clothes Dryer Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings Residential % % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio Residential $ 1,118 $ 5,600 $ 4,073 $ 8,514 $ 531 $ 19, % CenterPoint Oklahoma continues to deliver the Clothes Dryer Program in its 2017 CIP Portfolio. While no immediate changes are planned for this program, the Company is evaluating the viability of offering inducements to customers who replace existing natural gas dryers with new, and more efficient natural gas models. Currently, the dryer inducement is offered to customers who replace an electric dryer with a natural gas model. 32

36 Electronic Ignition Hearth Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings Residential % % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio Residential $ 2,794 $ - $ 1,091 $ 14,290 $ 797 $ 18, % The Electronic Ignition Hearth program has not experienced high levels of participation or customer interest since its inception in As a result, CenterPoint Oklahoma proposed that this program be discontinued in its CIP Portfolio (Cause No. PUD ). 33

37 Cooking Range Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings Residential % % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio Residential $ 1,118 $ 17,700 $ 4,141 $ 8,514 $ 531 $ 32, % CenterPoint Oklahoma continues to deliver the Cooking Range Program in its 2017 CIP Portfolio, and does not propose any major changes in the program at this time. 34

38 New Home Construction Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings Residential % % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio Residential $ 3,353 $ 26,250 $ 2,729 $ 14,190 $ 797 $ 47, % CenterPoint Oklahoma continues to offer inducements for residential new home construction projects. As filed in the Company s CIP Portfolio plan, and approved by OCC (Cause No. PUD , Order No ), the inducement was increased from $750 to $1,000 and the program s name has been changed from New Home Construction to High Efficiency Homes. Residential Energy Audit Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio Residential $ 1,676 $ - $ 2,889 $ 8,514 $ 531 $ 13, % The Residential Energy Audit is an educational program designed to provide information to homeowners through an on-site energy audit. The program does not deliver directly quantifiable energy savings and has generated very low numbers of participating customers since its 35

39 inception in As a result, CenterPoint Oklahoma proposed that this program be discontinued in its CIP Portfolio (Cause No. PUD ). Natural Gas Commercial Solutions Participation & Energy Savings Participation Gross Energy Gross Savings Net Energy Net Savings GS , % 9, % CS , % 8, % Total 69 19, % 17, % Program Expenditures Admin. Inducements Education/ Marketing Delivery EM&V Total Program % of Total Portfolio GS-1 $ 2,812 $ 79,673 $ - $ 116,832 $ 1,336 $ 200, % CS-1 $ 541 $ 29,969 $ - $ 22,468 $ 257 $ 53, % Total $ 3,353 $ 109,642 $ - $ 139,300 $ 1,593 $ 253, % CenterPoint Oklahoma continues to deliver the Natural Gas Commercial Solutions Program in its 2017 CIP Portfolio, and does not propose any major changes in the program at this time. 165: (b)(21): Research and Development Activities 165: (c)(21): A list of research and development activities included in the demand portfolio, their status, and a report on the connection between each activity and effective energy efficiency programs. 36