ESA Program Multifamily Segment Study Public Workshop #3

November 13, 2013

2

Introductions

Multifamily Segment Study Program Administrators• PG&E: Mary O'Brian

Multifamily Segment Study Team• CPUC ED: Tory Francisco• PG&E: Mary O'Brian • SCE: Carol Edwards • SDG&E & SoCal Gas: Brenda Gettig

Multifamily Segment Study Contractors• The Cadmus Group: Anne West, Teri Duncan, Eric Rambo, Amy

Ellsworth, Cynthia Kan, Gina Henderson, and a host of others• Research Into Action: Jane Peters, Duane Moran, Joe Van Clock…

… And in the room … and on the phone (we’ll call out each IOU and

organization; please announce yourself with others in your group)

Agenda

– Introductions – ESA Program Objectives & Current Policy Objectives– Review Key Research Questions – Updates on Market Characterization Research Findings– Survey Research Findings– Key Findings - Primary Research Questions– Recommendations – Open Discussion and Comments on Draft Report – TimelineWe encourage discussions throughout the presentation

3

4

ESA Program Objectives Current Policy Objectives

• The dual objectives of the ESA Program are to provide low-income customers with ways to reduce their energy bills and improve their quality of life – Commission’s vision for low-income communities, as stated in

California Strategic Plan for Energy Efficiency By 2020, 100% of eligible and willing customers will have received

all cost-effective [Energy Savings Assistance Program] measures– Decision 12-08-044 directs the IOUs to administer the ESA

Program to yield maximum energy savings at reasonable costs provide an improved quality of life for the low-income populations

5

ESA Program Multifamily Segment Study Key Considerations

How can the current multifamily program offering, in particular the multifamily component of the ESA program, be modified to better meet the needs of low-income multifamily residents?

How can integrated outreach, education, and marketing be most effective in reaching low-income multifamily housing owners/operators?

How can the current service delivery approach be modified to address multifamily, energy-efficiency programming concerns?

Should multifamily segment measure offerings be modified to include more or different measures?

6

Multifamily Study Research QuestionsHow do we help California advance long-term plans to meet the needs of low income IOU customers living in multifamily housing?

What are the characteristics of the low income MF segment Where are the low income MF buildings located? In what ways is this segment being served through the existing ESA

program? (doing and not doing)? Who is the MF customer -- tenant or building owner? What is available (services & benefits) to the MF customer now, via IOU

or other programs? What do MF customers need from the IOU? What are the barriers to serving MF customers? How are other MF programs offered; what are their organizing

principals?

7

ESA Program Multifamily Segment Study Research Methods

• IOU program manager interviews: background on ESA program, MFEER, EUC MF• 14 interviews with organizations representing market rate housing, affordable

housing, an installation contractors: focused on financing, participation barriers• 124 surveys with owners and operators of market rate and affordable housing in

the 4 IOU territories: characterize the multifamily segment and provide insight into decision making

• Literature search identifying low-income and multifamily programs cataloged key program elements of multifamily and low income programs statewide

• Secondary and primary research examined 44 programs nationwide; cataloged 37 and examined 5 key programs in depth

• 16 state and national options for financial offerings were cataloged • ESA Program databases & IOU data used to develop the survey sample,

determine the mix of measures installed and measure cost, and to identify the geographic location of participants for the program penetration analysis

8

Updates on Market Characterization Research Findings

9

Updates on Research Findings

• Additional research on buildings and equipment • Number of buildings, size, vintage, equipment age,

opportunities by weather zone• ACS, AHS, RASS

• Measure costs• Utility tracking data

• Comparison with other enumerations • ACS, Peterson-Athens, Evergreen, RASS

10

Research Question: What are the characteristics of the low income MF segment?

Low-income households make up about 30% of all households statewide

871400070%

2396290.2754590119%

147709.7245409871%

905094.199293667%

232244.578406342%

37962.22230%

Adequate Income

Low-Income Single Family

Low-Income Mobile Home

Low-Income Multifamily Market Rate

Low-Income Multifamily Rent Assisted

Low-Income Multifamily Tenant Owned

Tota

l Hou

seho

lds

11

The Low-Income SegmentLow-income multifamily 5+ households make up almost one-third of low-income

households statewide

829943.17262136222%

1033245.9307568228%

494889.86058900613%

38212.09242481721%

147709.7245409874%

905094.1992936624%

232244.578406346%

37962.22231%

Single Family Rent

Single Family Own

Multifamily 2-4 Rent

Multifamily 2-4 Own

Mobile Home

Multifamily 5+ Market Rate

Multifamily 5+ Rent Assisted

Multifamily 5+ Tenant OwnedLow

-Inco

me

Hou

seho

lds

12

Low-income Owners of Multifamily Units

• Characterization Data* suggests:• 3% of low-income MF units are tenant

owned (1% of all LI)• Measure based differences:

– AC (58% compared to 38% of renters**)– Energy Star appliances (57% compared to 35%***)

• Housing stock

No surveys conducted with low income owners in multifamily units

*AHS data IS LIMITED – Low number of survey responses results should be interpreted with caution

829943.17262136222%

1033245.9307568228%

494889.86058900613%

38212.09242481721%

147709.7245409874%

905094.1992936624%

232244.578406346%

37962.22231%

**Statistically significant difference p < 0.10 ***Statistically significant difference p < 0.05

13

Low-income Multifamily RenterAffordable and Market Rate Housing

Affordable/Subsidized MF Market– 6% of total LI market– Or, about 20% of LI MF market

Market Rate LI MF Market– 25% of total LI market– Or, about 75% of LI MF market

829943.17262136222%

1033245.9307568228%

494889.86058900613%

38212.09242481721%

147709.7245409874%

905094.1992936624%

232244.578406346%

37962.22231%

14

IOU Total HouseholdsLow-Income Multifamily Households1

Percentage of Total

Households

PG&E 5,185,000 389,000 7%SCE 4,115,000 335,000 8%SDG&E 1,170,000 117,000 10%SCG 6,167,000 657,000 11%Statewide 12,433,000 1,175,000 9%1. The sum of the LIMF household column by utility, 1,498,518, includes households served by 2 IOUs.

Source: U.S. Census Bureau American Community Survey 2011

The Low-Income Multifamily Segment Proportion of total households

15

IOU Low-Income Households

Low-Income Multifamily Households1

Percentage of Low-Income Households

PG&E 1,459,000 389,000 27%SCE 1,240,000 335,000 27%SDG&E 302,000 117,000 39%SCG 1,980,000 657,000 33%Statewide 3,719,000 1,175,000 32%1. The sum of the LIMF household column by utility, 1,498,518, includes households served by 2 IOUs.

The Low-Income Multifamily Segment

Proportion of low-income households

Source: U.S. Census Bureau American Community Survey 2011

16

IOU Multifamily Households

Low-Income Multifamily Households1

Percentage of Multifamily Households

PG&E 947,000 389,000 41%SCE 789,000 335,000 42%SDG&E 308,000 117,000 38%SCG 1,493,000 657,000 44%Statewide 2,776,000 1,175,000 42%1. The sum of the LIMF household column by utility, 1,498,518, includes households served by 2 IOUs.

The Low-Income Multifamily Segment

Proportion of multifamily households

Source: U.S. Census Bureau American Community Survey 2011

17

IOU ACS Households

RASS Households

ACS/RASS Households

ACS Multifamily Households

RASS Multifamily Households

ACS/RASS Multifamily Households

PG&E Electric 4,263,939 4,634,081 92% 790,156 728,996 108%

SDG&E Electric 1,169,705 1,230,071 95% 308,055 278,170 111%

SCE Electric 4,115,093 4,371,616 94% 789,022 705,027 112%

Source: U.S. Census Bureau American Community Survey 2011 and 2009 RASS

Comparison of Cadmus and RASS EstimatesCadmus estimates fewer total households but more multifamily households

• 2009 RASS has large sample but weak response rate but 2011 ACS 21x larger and better response rate• 2009 RASS: n = 25,721; response rate 18%• 2011 ACS: n = 544,878; response rate 98%

• But 2011 ACS allocation by geography; 2009 RASS targets known utility customers

18Source: U.S. Census Bureau American Community Survey 2011 and 2012 Athens Research

Comparison of Cadmus and Athens Estimates Cadmus estimates 3% fewer low-income households than Athens

Los A

ngeles

Orange

San Bernardino

Alameda

Contra Costa Kern

San Fr

ancisco

San Jo

aquin

Sonoma

Santa Barbara

Monterey

San Lu

is Obisp

o

Merced

Butte

El Dorado

Imperia

l

Madera

HumboldtSu

tterLa

ke

Tuolumne

Calaveras

Amador

Del Norte

Colusa InyoMono

ModocAlpine

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

County

Cadm

us D

evia

tion

from

Ath

ens E

stim

ate

• Cadmus developed estimate of low-income multifamily households at the census tract • For low-income estimates at county level we applied Athens percentages to Cadmus

estimate of households• Figure shows percent difference between Cadmus and Athens estimate of households,

in order of total number of households – Average = 97%

Counties sorted by size

19

Survey Research Findings

20

Surveys with Building Owners and Operators of Market Rate and Rent Assisted Housing

Surveys asked about: Numbers of buildings and sizes Building characteristics including equipment Awareness of IOU energy efficiency programs Decision making related to purchase and installation

of energy efficient equipment

21

Market Rate59%

Rent Assisted41%

Survey Respondents

Surveys with Building Owners and ManagersRent Assisted Sample Compiled From:• (HUD) Section 8 rental subsidy program• Low Income Housing Tax Credit (LIHTC) administered by

the California Tax Credit Allocation Committee (CTCAC)• US Department of Agriculture for California Rural

Development• With help from CHPC

Market Rate Sample Compiled From:• Customer databases from all 4 IOUs• Included master or common-area meter accounts in

buildings with at least one CARE recipient• Selected census tracts with low income households• Internet search housing associations larger cities• Contacts suggested by CHPC• SCE identified MFEER building ownersVery difficult to reach BOTH samples• Outdated phone numbers • Difficult to find owners• Refused survey• Cannot or will not confirm tenants are low income• Other reasons

22

Surveys with Building Owners & OperatorsSampling Plan and Weighting

Sector Size Planned Completed

Assisted5 to 25 Units 50 226 to 249 50 14250 or More 50 35

Market5 to 25 Units 50 3626 to 249 50 26250 or More 50 11

Total 300 124

Sector Sector Weight Size Design Weight

by Size StrataCombined

Weight

Assisted 0.125 to 25 Units 0.45 0.05426 to 249 Units 0.45 0.054250 or More Units 0.10 0.012

Market 0.885 to 25 Units 0.45 0.39626 to 249 Units 0.45 0.396250 or More Units 0.10 0.088

Size refers to the number of apartment units in CA

Weights bring responses of the sample in line with the estimated population

23

Market

Assisted

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

48%

23%

50%

19% 58%

YesNoDon't know

Percent Responding

Sect

orParticipation in Utility Rebate Programs

Do you know if your company has taken advantage of any utility offered rebate programs? (n=124)(Respondents mentioned measures installed and some programs by name)

Half have not participated

More than half don’t know

24

Cost, Price of Equipment

Other

Don't know

Tenants pay utility bill, No incentive

Availability of Equipment

Not Enough Information

No Incentives or Equipment is Ineligible

0% 10% 20% 30% 40% 50% 60%

2%

6%

24%

10%

21%

15%

15%

1%8%

1%

Assisted

Market Rate

Percent Responding

17%

Reasons for Not Installing Energy Efficient Equipment When Upgrading

Can you tell me why your company did not make those improvements with more energy efficient equipment? (n=51)

25

Manages Only

Owns Only

Manages and Owns

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

74%

44%

63%

26%

56%

36%

YesNoDon't know

Percent Responding

Ow

ners

hip

Stru

ctur

eAwareness of Utility Sponsored

Low-Income Programs

Have you ever heard of a program offered by the utilities which provides income qualified households with free equipment and services such as energy efficiency lighting or appliances to help customers save energy and money on their energy bills? (n=124)

26

Awareness of Utility Sponsored Low-Income Programs

• Responses were weighted to reflect the estimated population• Owners and managers of larger numbers of units in CA were more aware of utility

sponsored low-income programs than those of smaller numbers of units

25 or Fewer Units

26-249 Units

250 or more Units

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

46%

76%

90%

51%

24%

10%

YesNoDon't know

Percent Responding

Build

ing

Size

:N

umbe

r of u

nits

in C

A

27

Market

Assisted

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

64%

63%

20%

17%

13%

19%

YesNoIt dependsDon't know

Percent Responding

Sect

orPercentage Who Would Support Tenant

Participation in Income-Qualified Programs

This program requires you to complete paperwork and allow contractors not hired by your company to access your property. Would you be supportive of tenants if they wanted to participate? (n=92)

28

Percentage Who Would Support Tenant Participation in Income-Qualified Programs

25 or Fewer Units

26-249 Units

250 or more Units

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

60%

64%

77%

11%

30%

13%

25%

6%

4%

10%

YesNoDependsDon't know

Percent Responding

Build

ing

Size

:N

umbe

r of U

nits

in C

A

This program requires you to complete paperwork and allow contractors not hired by your company to access your property. Would you be supportive of tenants if they wanted to participate? (n=92)

29

Survey Findings: Decision MakingRent Assisted & Market Rate Sectors

Decision Making Themes Rent Assistance Housing Market-Rate HousingPayment for upgrades when equipment cannot be repaired

23% credit card20% reserve account12% savings

16% credit card21% reserve account43% savings

Payment for upgrading operable equipment

46% reserve account 23% credit card

39% savings 17% credit cards13% reserve accounts

Awareness of financing options

41% not aware of financing options36% aware of tax credits

68% not aware of financing options9% were aware of tax credits

Factors influencing decisions to replace or upgrade equipment

93% said cost53% said energy efficiency 42% size of upgrades

75% said cost 31% energy efficiency

30

Decision Making Themes Rent Assistance Housing Market-Rate Housing

Decision Maker 51% owners or managers 74% owners or managers

Decisions made one building at a time or for the portfolio

46% whole portfolio 33% one building at a time

12% whole portfolio 77% one building at a time

Planning for Upgrades 44% when equipment breaks 23% plan ahead

73% when equipment breaks 16% plan ahead.

Planning Timeline25% plan less than one year before 38% between one and two years in advance

43% less than one year before 24% between one and two years in advance

Survey Findings: Decision MakingRent Assisted & Market Rate Sectors

31

Survey Findings: Decision MakingRent Assisted & Market Rate Sectors

Decision Making Themes

Rent Assistance Housing Market-Rate Housing

Do these factors make it difficult to upgrade?

48% lack of capital 24% lack of access to financing25% lack of attractive financing terms26% coordinating funding with opportunities

17% said lack of capital 12% lack of access to financing 12% lack of attractive financing terms 17% coordinating funding with opportunities

32

Key FindingsPrimary Research Questions

33

Primary Research Questions

Where are the low income MF buildings located? In what ways is this segment being served through the existing ESA

program? (doing and not doing)? Who is the MF customer -- tenant or building owner? What is available (services & benefits) to the MF customer now, via IOU

or other programs? What do MF customers need from the IOU? What are the barriers to serving MF customers? How are other MF programs offered; what are their organizing

principals?

34

Where are the low-income multifamily building opportunities located?

• Geocoding of ACS data allows estimate of the number of households in each census tract, county, etc.

• Estimation of buildings is more difficult• Census data is collected at household level

• A rough estimate is possible using basic math: • 1000 LIMF households living in buildings with 5 to 9 units:

1000 ÷ 7 = 143 buildings• But low-income households live among adequate-income

households in the same buildings• If the average mixing ratio (low : adequate) is 2:1 then:

1000 x 1.5 ÷ 7 = 214 buildings

35

Building Size PG&E SCE SDG&E SCG

5 to 9 Units 23,000 19,500 7,000 38,500

10 to 19 Units 9,500 8,000 3,000 16,000

20 to 49 Units 3,500 3,000 1,000 6,500

50 or More Units 2,000 2,000 500 3,500

Total 38,000 32,500 11,500 64,500

Estimated Number of Buildings Housing Low-Income Multifamily Households by Building Size

Where are the low-income multifamily building opportunities located?

Note: This table refers to building size. This is not the same as the survey data which reported the number of apartment units in CA.

36

Where are the low-income multifamily building opportunities located?

•Specific market data can help the IOUs develop customized marketing and delivery strategies for their target populations

It depends:Opportunities are associated with building vintageHeating and cooling equipment age, weather zone….

37

• Statewide, 68% of low-income multifamily households live in units built before 1980 (~799,000 households) Best opportunity for shell upgrades

• About 80,000 of these households are in climate zones 11 through 16 and in pre-1980 buildings

• Costs for envelope and air sealing ~$155 per unit x 80,000 units = $12.4 million

Building Vintage

Riverside

San Diego

San Jose

Sacramento

Anaheim

Oakland

Los Angeles

San Francisco

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

17%

29%

31%

32%

34%

50%

51%

73%

9%

19%

19%

14%

20%

8%

13%

8%

7%

9%

6%

10%

13%

8%

8%

9%

10%

11%

8%

10%

6%

3%

7%

1%

34%

22%

5%

20%

18%

12%

8%

2%

9%

3%

5%

2%

2%

10%

3%

1%

4%

3%

11%

3%

1%

3%

3%

3%

10%

4%

15%

8%

6%

7%

6%

2%

Before 19701970 to 19741975 to 19791980 to 19841985 to 19891990 to 19941995 to 19992000 or Later

Distribution of Low-Income Multifamily Households by Vintage and MSA

38

Heating Equipment

• 2009 Residential Energy Consumption Survey (RECS) for Western Census Region • 40% of low-income multifamily households have heating

equipment 20+ years old (49% gas heat; 32% electric heat)

• About 216,000 households have forced air heating systems 20+ years representing about 21,600 buildings

• Cost for furnace replacement @ about $1329 = $28.7 million

39

Cooling Equipment

• PG&E about 120,000 low-income multifamily households in climate zones 11 – 13. • 78% have central AC• 28% have equipment 20+ years old

• 25,200 households have central AC equipment 20+ years old• Cost for central AC replacement @ about $2,761 = $69.6

million

40

Mobility Among Low Income Multifamily Households

• 55% of low-income tenants stayed in their previous apartment three years or less

• Over two 3-year cycles, the rate of turnover in an 80% low-income building assures that about 93% of a building’s units will have been inhabited by low-income households

0 to 1 1 to 2 2 to 3 3 to 4 4 to 5 5 to 6 6 to 7 7 to 8 8 to 9 9 to 100%

10%20%30%40%50%60%70%80%90%

100%

Low IncomeAdequate Income

Years in Prior Residence

Perc

ent o

f Tot

al M

ultif

amily

Ho

useh

olds

41

In what ways is this segment being served through the existing ESA program?

• Little policy distinction between SF and MF– Primarily in-unit measures– 80-20 Rule allows shell measures and vacant units

• Practical differences in service – Need for property owner permission for rental

property (99% of LI MF are renters )– Fewer feasible measures (potentially less savings)

42

In what ways is this segment being served through the existing ESA program?

• In 2012, utilities invested between $156 and $420 per household in energy saving measures

Utility2012 Multifamily

Households Receiving Measures

2012 Measure Cost

Cost per Household

PG&E 19,723 $8,283,942 $420

SCE 13,839 $2,158,019 $156

SCG 17,897 $3,925,482 $219

SDG&E 10,009 $2,878,598 $288

43

• Energy-efficiency services and incentives available to multifamily customers in California are divided: – Programs with a primary focus on serving the tenant as

the multifamily customer – Programs with a primary focus on reaching the building

owner as the multifamily customer

Who is the multifamily customer – the tenant or building owner?

44

What is available (services and benefits) to the Multifamily tenants and building owners now

Program Characteristics

Programs Targeting TenantsPrograms Targeting Building Owners

MFEERWhole Building

ESA Program CSD Program Bay REN EUC MF Path and SoCal REN

Building Areas Treated

Dwelling units Dwelling unitsDwelling unitsCommon areasCentral systems

Dwelling unitsCommon areasCentral systems

Dwelling unitCommon areasCentral systems

Typical retrofit scope

Lighting measures, hot water saving measures,

weatherization, refrigerator

replacement

Lighting measures, hot water saving

measures, weatherization,

refrigerator replacement

Single-measure upgrades: primarily lighting for PG&E,

SCE, and SDG&E, water saving measures for SCG

Multiple measure upgrades

Comprehensive upgrades

Measure Identification

Walk-through assessment

Energy audits using diagnostic equipment

No standard protocol, contractor may conduct an assessment to determine

scope of work

Building owner completes

software-based assessment

Investment grade audit

Incentive type Direct installation1 Direct Installation1 Prescriptive rebates2 – may cover full cost to participant

Fixed per-unit incentive3

Performance-based incentive4

45

What is available (services and benefits) to the low-income multifamily tenants now?

• Low-income programs targeting households: ESA & CSD Programs– Provide similar services focused on low-income

households – Primarily provide in-unit measures– Ongoing efforts to improve coordination– MIDI?

46

What is available (services and benefits) to the multifamily building owners now?

MFEER

• Single measure upgrades– Primarily lighting and hot water

savings measures

• No standard audit protocol– Contractor may conduct assessment

to determine scope of work

• Prescriptive rebates– May cover full retrofit cost for some

measures

Whole Building (e.g. EUC MF)

• Comprehensive upgrades

• Investment grade audit

• Performance-based incentives

• Single Point of Contact will direct building owners to appropriate programs and assist with coordination

47

Comprehensive Low-Income Multifamily in CA?

• LI MF building owners must participate in multiple programs

• Integration of ESA and MF EUC occurs differently across the state– Installation of ESA measures may make it more

difficult for a building to meet MF EUC performance targets

48

What are the barriers to serving MF customers?

• Need to obtain property owner permission is primary barrier to serving MF tenants

• Primary barriers to reaching MF building owners:– Lack of prioritization of energy efficiency– Lack of access to capital; other priorities for investment

• Both tenant and owner affected by split incentives– Reluctance (& inability) of tenant to pay for upgrades to

equipment in space they do not own– Reluctance of owner to pay for upgrades that lower tenant

(but not necessarily owner) bills

49

Thresholds for Qualification

Administrator Income Eligibility Requirement

Proportion of Tenants that Must Meet Eligibility Requirement

ESA Program 200% of federal poverty level or less 80%

Energy Outreach Colorado

200% of federal poverty level or less 67%

CSD Programs 60% of state median income or less 67%

Massachusetts IOUs 60% of area median income or less 50%

NYSERDA 80% of state median income or less 25%

50

Alternative Income Documentation

In comparison programs we found examples:– Primarily for buildings receiving housing subsidies

– subsidy status a proxy for income– NYSERDA “Rent Roll” certification offers a broader

alternative – the simplest, but least certain

51

Support for Building Owners

• A single point of contact provides this guidance– All comparison programs provide participants with

a single point of contact• Dual role: technical advice and program participation

support

– IOUs have proposed a single point of contact• Part of EUC MF Path program, but will work with

participants in other programs• Focus is on program participation support

52

How are other multifamily programs offered? What are their organizing principles?

• Promote comprehensive upgrades– Assess opportunities to develop a scope of work

based on cost effectiveness requirements– Provide substantial incentives– Assist with financing

• Nonprofit and public benefits organizations prominent in program delivery

53

How are other multifamily programs offered? What are their organizing principles?

Administrator Broad ApproachCNT Energy Partnership + case managementNYSERDA Facilitation + performanceEnergy Outreach Colorado Clearinghouse + general contractorMassachusetts gas and electric IOUs Gatekeeper + full servicePublic Service Electric & Gas Company (PSE&G) All comers + financing

54

Recommendations

55

ESA Program Multifamily Segment Study Recommendations Methodology

• Recommendations Context:– Develop alternative program design and delivery strategies for

consideration by IOUs and Commission

• Objectives: – Provide cost effective energy efficiency services to 100% of eligible

and willing customers by 2020– Program will be “directed, administered, and delivered in a manner so

as to yield significant energy savings”

California Public Utilities Commission. California Energy Efficiency Strategic Plan. January 2011 Update, pg. 23-24

Decision 12-08-044

56

ESA Program Multifamily Segment Study Recommendations Methodology

Barr

iers

, Driv

ers,

Rep

licab

le

Mod

els

Eligibility rules

Participant intake

Enrollment

Technical & Administrative support

Marketing & Outreach

Delivery and Implementation

• Reviewed– Research findings– Market

characteristics/analysis– Existing LI/MF efficiency

programs in California and elsewhere

Resulting recommendations fall under two scenarios: (1) Reaching more income-qualified people(2) Maximizing cost effective energy savings

57

RecommendationsReaching More Income Qualified People

• Context: – Goal consistent with ESA’s long term vision, as directed in California

Energy Efficiency Strategic Plan – Much already accomplished– Current operations comply with existing programmatic framework

with rules, policies, and procedures set by the Commission– Significant program design adjustments by IOUs may be limited

• But: As program matures, it will become harder to reach the “high hanging fruit”

• Recommendations intend to help ESA reach increasingly hard-to-reach populations and attract more income qualified households to the program

58

Recommendations Reaching More Income-Qualified People

• As program matures, IOUs will need to dedicate greater resources to finding harder to reach participants– Pockets of LI housing in affluent areas– LI tenants in market rate buildings– Older buildings, climate zones indicating shell potential– Specific equipment at or near the end of their useful lives

• Benefits: – Treat more households, contribute to ESA long term vision

• Costs: – Reallocate marketing dollars to enable targeted research to find

remaining eligible households

Consider adopting customized recruitment/marketing strategies (by IOU) to target measures, buildings, and geographic areas

59

Recommendations Reaching More Income-Qualified People

• Currently treats:– Occupied and verified units (80%) – Unoccupied units (within the 20% not verified)– But not occupied units with unverified tenants

• Benefits of treating all available opportunities – Saves outreach costs – Maximizes savings & minimizes lost opportunities– Likely to benefit low income households during the measures’ life

• Consider: tenant mobility & housing characteristics• Further research:

– Quantify costs and savings to treat units not treated in otherwise qualified buildings

In buildings where 80% of the tenants are income-qualified, treat all units in the building whether they are vacant or occupied, as well as the building shell

60

Recommendations Reaching More Income-Qualified People

• Current policies simplify income verification requirements to ease enrollment– Tenants can self-certify income in geographical areas with > 80% low

income – Categorical eligibility allows other assistance programs’ income qualification

requirements to serve as a proxy for ESA Program qualification• Recommend assessing opportunities to expand exceptions for buildings enrolled

in a subsidy program (e.g., section 8, HUD)• Two options, mutually exclusive, and likely applies to less than 18%

• Allow tenants to self-certify income in individual buildings that meet certain characteristics (for example, HUD, Section 8, deed restricted)

• Or, extend categorical eligibility policy to allow building level participation, i.e., the building could be treated without talking to each tenant, based solely on the records kept by the building

Consider options for expanding current process exceptions to subsidized buildings

61

• Benefits:– Simpler process eases burden on contractor, tenant, owner for qualifying buildings– Serves more participants– Closes gap for missed tenants

• Costs:– Potential risk since the program could serve a larger number of people; some may

earn more than 200% of Federal Poverty Guidelines– Costs of treating additional units

• Additional research:– Determine whether subsidized buildings’ income eligibility rules are aligned with

ESAs– Quantify costs and savings of treating every unit in every subsidized (and yet

untreated) building, and units in subsidized, partially treated buildings

Consider options for expanding current process exceptions to subsidized buildings

Considerations

62

RecommendationsMaximizing Cost-Effective Energy Savings

• Context:– Commission and Decision guidance “maximize cost effective energy

savings” points toward comprehensive approach– Requires significant changes to ESA program approach

• Treat building owners as customers • Market to building owners• Complex assessments and more expensive installations • Greater savings, more people served may offset costs

– May entail changes to policy or rules– Research needed to assess full costs and benefits

63

Recommendations Maximizing Cost-Effective Energy Savings

• Comparison programs address building at 66% low income• 80% rule stems (in part) from prior ratepayer concerns • Benefits:

– More buildings and units treated, more energy savings – Due to tenant mobility, may benefit low income households – Alignment with CSD

• Costs:– Risk of serving non-eligible households– Strain program resources and/or divert spending from other goals

• Research needed to quantify verification savings, cost of treating non-eligible units, determine process for change

Review the rationale behind the 80/20 threshold for treating all units and building shell to ensure it remains consistent with the current policy objective

64

Recommendations Maximizing Cost-Effective Energy Savings

• Larger buildings undergo renovations every 15-20 years– Requires recapitalization or new debt– Good opportunity to integrate energy efficiency upgrades – But, represents a relatively small population of larger buildings

• Recommend researching target buildings (and trigger points) to align outreach– Research permitting and land use data to approximate rehabilitation schedules– Coordinate with lenders active in multifamily market– Coordinate with local governments for data on trigger points– Use targeted direct communications

• Costs: relatively small, staff time to conduct research• Benefits: potentially significant energy savings

Consider researching building recapitalization cycles to inform marketing strategies that target building owners

65

Recommendations Maximizing Cost-Effective Energy Savings

• Most challenging to implement• Suggests need for:

– Comprehensive building assessments– Significant technical and administrative support/single point of contact

approach– Marketing to building owners/managers– Analysis of costs based on per building estimates

• Three scenarios proposed

Consider adding a comprehensive project path for ESA building owners who wish to implement whole-building upgrades

66

Scenario 1

• Allow buildings at the 80% threshold to receive:– All currently available services: unit upgrades, building shell, ceiling

insulation– Common area direct install measures – Common area lighting upgrades– Cost effective central system upgrades

Allow common area measures under the existing ESA Program rules along with shell measures

67

Scenario 2

• Ensure SPOC can support all LI and MF programs: e.g.,– Screen participants– Guide them to appropriate programs – Verify eligibility– Provide administrative support to building owners

• Provide larger incentives for income-qualifying buildings to overcome cost barriers in low-income housing– MFEER: Larger prescriptive incentives for common area measures– EUC MF: Incentive adder for low-income units or custom approach– Require all cost effective in-unit upgrades

Create a low-income program path for eligible building owners and managers within the existing MFEER and/or MF EUC programs

68

Scenario 3

• Train call center staff or add intake contractor to help guide participants, verify eligibility, and provide administrative support

• Add direct install measures for common areas• May entail both prescriptive (common area) and custom (whole building)

incentives• Allow building owners to use their own contractors or conduct a bidding

process

Create a new participation path within the existing ESA Program structure that allows building owners and managers to implement larger building upgrades

69

Suggestions for Further Research

• To make decisions about program and policy, utilize data from EUC MF– EUC MF actual costs and savings– How the unit-level measure mix differs between EUC MF and ESA

Program• Determine the total number of ESA-willing and available tenants

– The number of units that were not treated because they did not meet the 3 measure minimum (provides more information about the total number of units)

– Further data about barriers to participation to understand the percentage who are unwilling

• What does it cost to income-verify a tenant (e.g., cost to program, to contractors, to building management)?

• How many buildings were not treated (lost opportunity) because 80% of units were not income verified?

70

Suggestions for Further Research

• Determine the eligibility rules around HUD, section 8, etc., to see how they align with ESA program rules

• Determine the number of:• buildings (and units) subsidized through HUD, Section 8 etc.• buildings that have not been touched by the ESA program• subsidized buildings that have been partially treated

• How many market rate and subsidized buildings might qualify if 66% are income-qualified?

• In both 66% and 80% buildings, how many tenants are above 200% FPL• What are the costs for marketing research (e.g., to research recapitalization)

71

A Few Last Notes• There is great interest in the low income multifamily segment

– And, it is a hard to reach, difficult to characterize and understand– Difficult to determine the relationships between buildings, properties,

and companies, but it’s critical to understand points of contact– Many programs touch these customers

• The time and effort needed for this research was far greater than anticipated– But we had a stroke of luck with 2011 AHS oversample

• Survey research with building owners and managers fell short of anticipated target; owners were difficult to identify and reach

• Building characteristics profile is not possible under this research timeline and budget, i.e., determine the number of garden apartments, high rises etc.

• Market rate tenants are difficult to identify and reach; we did not find a means to locate them or ways to enroll them – not feasible to go door-to-door to verify income

72

Open DiscussionComments on Draft Report

73

Timeline

11/15/13 -- Public comments duewww.energydataweb.com

12/4/13 -- Post final report

Contact InformationMary O'Brian, PG&E: MJOb@pge.com

Tory Francisco, CPUC ED: tory.francisco@cpuc.ca.govAnne West, Cadmus: anne.west@cadmusgroup.com

Eric Rambo: eric.rambo@cadmusgroup.comDuane Moran, Research Into Action: Dulane.Moran@researchintoaction.com