NASEO 2018 Western Region Meeting Rural Energy Affordability, Efficiency, and Economic Development

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1 NASEO 2018 Western Region Meeting Rural Energy Affordability, Efficiency, and Economic Development Michael Leitman Strategic Analyst NRECA Business and Technology Strategies

2 Co-ops in NASEO Western Region 6 G&Ts, 110 Distribution Utilities (includes 16 NRECA member public, tribal and mutual utilities) Serve about 1.4 million consumer-members and 2.7 million people About 7% of nationwide co-op sales and consumer-members. Nationwide, 42% of distribution lines 8 meters per line mile.

3 Power Supply and Affordability Affordability starts with power supply. Hydropower is a vital resource in the West, supplying around 45% of the power sold by co-ops in the region. Wind and solar generation are also seeing rapid growth. Renewables play a particularly helpful role in affordability in non-grid areas of the region by offsetting diesel generation. Co-ops are experimenting with storage and microgrids. Consideration of joining or forming new organized markets.

4 Co-op Demographic Challenges Co-ops serve about 2.7 million people across the region. Average household income in co-op areas is about 16% below the regional average, and 10% below the U.S. average. 31% of households have incomes under $35k most vulnerable to increased home energy costs. Population in poverty is about 16%, about 2% higher than the regional and U.S. average, but with particularly high rates of over 20% in Arizona and New Mexico, including persistent poverty counties facing long term challenges. Affordable electricity is a cornerstone for electric cooperatives.

5 Co-op Housing Stock Challenges Housing stock is dominated by single detached homes, with low density and fewer large multi-unit structures, making large efficiency projects difficult. There is a much higher share in manufactured (mobile) homes, about 17%, three times the regional average. Households primarily heated by electricity matches the regional average of 34%, co-op areas have lower availability of utility natural gas (35% vs. 55%). Rural areas often lack a network of trained installers for efficiency and weatherization improvements.

6 Co-op Demand Side Programs Cooperatives in the region offer a variety of demand-side programs. Energy audits for various consumer types (e.g. residential, C&I, farm) are widespread, and many offer weatherization programs directly or through approved local area service providers. Many offer rebates and/or financing programs promoting efficient technologies, especially HVAC, water heating, and large appliances, many as part of the Energy Star program. A growing number offer some form of time-based rates, which can incentivize participants to shift usage to less expensive times, reducing costs for all members.

7 Beneficial Electrification Beneficial Electrification: The use of electricity in end-uses that would otherwise be powered by fossil fuels (natural gas, propane, fuel oil, or gasoline) to reduce greenhouse gas (GHG) emissions. The low-carbon energy mix in much of the West puts the region in a particularly good position to capture these gains. Heat-pump technologies are more efficient for HVAC and water heating. These tend to have higher up front costs than alternatives, so programs to help reduce these costs are helpful. Congress just extended tax-credits for geothermal HVAC through 2021.

8 Beneficial Electrification, ctd. Growing opportunities around electric vehicles, both for business and private use. Western Farmers Electric Cooperative Geo Validation Pilot Program installed ground loops and heat pumps in Oklahoma and New Mexico. Some members are testing a Thermal Services model in which the cooperative installs, owns and maintains the ground loop and is repaid over time through on-bill payments based on verified energy savings. Work with a consortium of vetted and verified installers. Having a big impact in ensuring that new-build housing developments come equipped with ground source heat pumps infrastructure.

9 Manufactured Home Programs Mobile homes make up about 16% of the housing stock in co-op areas, three times the regional average. These are particularly challenging from an efficiency standpoint. The vast majority were manufactured before HUD increased efficiency codes in 1994, and a good share before any codes at all. BPA has taken a lead in programs

10 Manufactured Home Programs, ctd. Mobile homes make up about 16% of the housing stock in co-op areas, three times the regional average. These are particularly challenging from an efficiency standpoint. The vast majority were installed before HUD increased efficiency codes for manufactured homes in 1994, and a good share before any codes at all. Northwest Energy Efficient Manufactured Housing (NEEM) program is national model.

11 Community Solar & Storage Cooperatives are leaders in Community Solar programs nationwide. While solar costs have declined rapidly across the board, utility-scale projects remain more cost effective. This shared model of service allows all members to participate even if they are renters or lack a suitable rooftop. NRECA is working with partners and members on Community Storage programs, including battery and thermal storage options.

12 Community and Economic Development Co-ops have a long history of fostering development in their communities. Many co-ops have economic development programs, using financing from USDA REDL&G loans and grants, partnerships with credit unions and other lenders, and unclaimed capital credits to finance local renewable projects, business parks, and community resources. LIHEAP and programs such as Operation-Round-Up used to help members, often through charitable foundations. Also offer youth programs and college scholarships for local students. Today, broadband is a major focus, leveraging the infrastructure from widespread AMI deployment to attract broadband developers, form partnerships, or in some cases set up broadband subsidiaries. Nationwide, co-ops also return more than $1 billion in capital credits annually to members, keeping money in the local economy.

13 Policies to Aid Affordability Expand the trained workforce in rural areas for energy efficiency and other demand side projects through local community and technical colleges. Support Beneficial Electrification to replace less efficient non-electric technologies, as well as supporting the replacement of less efficient electric and mixed systems at the end of their life. Help promote more efficient new manufactured housing, repairs and retrofits to existing stock, and programs to promote the replacement of the oldest pre-1976 stock (e.g. Cash for Clunkers ). Policies that support community options for renewable and storage.