Prepared for: Louisville Gas & Electric Company
Report, February 4, 1997
Prepared by:
Proctor Engineering Group,
Michael Blasnik, Principal Investigator
The program began in 1994 with a target of treating 1500 high use households over the life of a three year pilot effort. The main goals of the program include saving 15-20% of the participants' energy usage; reducing bills and therefore service disconnections, arrearage levels, and collection actions; and improving the health, safety, comfort, and quality of life of the participants.
The main program treatments include air sealing, attic insulation, heating system safety repairs, and energy education. Proctor Engineering Group (PEG) was hired by the LG&E Collaborative to perform an impact evaluation of the program. This report describes the methods employed in the evaluation and the findings including: estimates of the gas and electricity savings achieved by the program; descriptions of the participants, housing stock, and treatments; and an assessment of some of the non-energy benefits. Cost-effectiveness analyses are also provided from a number of perspectives.
Data Collection
As part of the evaluation, PEG had to create a program tracking system from a combination of various existing electronic data sources and from manual data entry on more than 1300 case files. Some of the difficulties encountered while performing this task are described in the report. PEG acquired historical monthly gas and electric usage data from LG&E billing records. Data on arrearages could not be obtained, but some information was obtained on collection problems and service disconnections.
Analysis Methods
Gas savings were evaluated using a standard pre/post comparison of weather-normalized energy consumption based on billing data. The participant group for this analysis included all participants treated by the end of 1995. A comparison group was created from later participants. Net savings were calculated as the average change in the participants' weather-normalized usage minus the average change in the comparison group's weather-normalized usage (which was very small).
Electricity savings were evaluated in a similar manner, but difficulties in weather-normalizing the cooling loads led PEG to pursue an alternative statistical approach (a pooled time-series cross-sectional regression analysis). The results from the two methods were comparable, but the alternative approach provided several advantages and was used as the primary source of electricity savings estimates. The program's impacts on payment problems and service disconnections were assessed using a standardized rate approach which compares the observed frequencies for the treated and treated houses each month, controlling for month-specific effects.
Findings
The gas and electric usage and savings analysis found that participants in Energy Partners saved an average of 186 ccf of gas and 783 kWh of electricity annually due to program treatments. The gas savings equal about 12% of total usage and 16% of heating usage. The electricity savings equal about 8% of a very high total annual usage level of more than 11,000 kWh. These energy savings are worth about $128 in bill reductions at current rates, or about $61 in marginal costs for LG&E.
Savings from individual measures were difficult to estimate due to certain aspects of the program design and field data collection problems. However, it appears that insulation saved as much as expected while air sealing may not have performed as well, particularly for houses which received a very large amount of air sealing work. Participant education was likely responsible for some of the electricity savings, but no evidence was found to indicate that heating season thermostat settings were affected.
The frequency of service disconnections dropped by 22% after treatment as did the frequency of "brown" bills (termination notices). These reductions are equivalent to avoiding approximately 76 disconnections and 980 brown bills annually per 1000 participants. The frequencies of late and missed payments also declined.
Changes in arrearage levels could not be quantified due to a lack of data. Numerous gas leaks and safety hazards were identified and repaired through the program with approximately three quarters of all participants receiving safety-related repairs to their heating or water heating equipment. A number of other potential non-energy benefits in areas ranging from participant health and housing affordability to economic and environmental benefits were also identified, but mostly remained unquantified.
Cost-Effectiveness
Program costs averaged $1062 per house for direct weatherization treatments, including $122 for heater safety repairs. Overall pilot costs averaged about $1600 per house when including all start-up and evaluation costs. The cost for a continuing version of Energy Partners is estimated at $1355 per unit including some on-going training and evaluation costs.
The present value of the energy savings is $1434 when these savings are valued from the participants' perspective, making Energy Partners cost effective as a continuing program. LG&E's low avoided costs make the net present value of energy savings worth just $691 on an avoided cost basis. From this perspective, Energy Partners is not currently cost effective unless non-energy benefits are valued at more than $600 per participant.
Comparison to Goals
In comparison to the program goals, Energy Partners fell a little short on overall percent energy savings, but did have significant impacts on participantsâ bills and service disconnections, and identified and repaired many health and safety problems. Relative to other low income weatherization programs, Energy Partners compares favorably by providing more savings per dollar invested than many other programs including the national WAP study (WAP cost more and saved slightly less than Energy Partners).
The high gas and electric usage levels of Energy Partners' participants contributed to the fairly high ccf and kWh savings, but also played a role in the relatively modest percent savings.
Recommendations
Overall, Energy Partners has provided a sound foundation for assessing future low-income weatherization efforts. Although PEG is hesitant to make specific recommendations without direct in-field observation of the program housing stock and treatments, the evaluation results and PEG's experience point to several issues which may be worth exploring.
The targeting of high gas use households is a key element in helping Energy Partners achieve a fairly high level of savings per dollar invested. This targeting could be refined. Among program participants, the 24% of households who used more than 1800 ccf/yr before treatment saved nearly twice the average while the 27% who used less than 1200 ccf/yr saved only about half the average.
It appears that cost-effectiveness could be improved by devoting a smaller fraction of program resources to low-use households. In addition, measures such as dense-pack wall insulation and targeted heating system replacements should be explored for their potential to cost-effectively increase savings among high gas use households. Electricity savings may also provide opportunities for improved cost-effectiveness, particularly if savings are valued from the participants' perspective.
Targeted cooling system efficiency upgrades (through advanced tune-ups of central systems or replacements of older window units) and refrigerator replacements can reduce bills considerably, but may not be cost effective on an avoided cost basis unless targeted narrowly. Enhanced energy education focusing on more efficient or reduced use of air conditioning, space heaters, and large appliances such as freezers may be particularly worthwhile given the high electric usage levels found.
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