Commercial Lighting Program

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Central Hudson Gas & Electric Company

Commercial Lighting

Program

Phase II Process Evaluation · December 2011

Revised December 2012

Prepared by:

Applied Energy Group

1377 Motor Parkway, Suite 401 · Islandia, NY 11749

Tel (631) 434-1414 · Fax (631) 434-1212

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Abstract

Central Hudson Gas and Electric, a regulated transmission and distribution utility serving gas and electric customers in New York State’s Mid-Hudson River Valley, retained Applied Energy Group (“AEG”) to conduct a process evaluation of Central Hudson’s Small and Mid-Sized Commercial Lighting Program. The Small and Mid-Sized Commercial Lighting Programs encourage customers to install energy efficient interior lighting and lighting controls. A free energy audit identifies efficient lighting measures and potential savings, installation costs and anticipated payback. Incentives cover up to 70 percent of the equipment and installation cost. Customers are eligible for zero percent financing to cover the remaining 30 percent of the equipment and installation cost.

To arrive at the final recommendations of the process evaluation, AEG conducted interviews with Central Hudson program staff, the third-party program implementer and participating customers. AEG also reviewed program materials, updated the program logic model and assessed Central Hudson’s program tracking methods and databases. The results of the analysis, along with key findings and recommendations for program improvements are included in this report.

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List of Tables

Table ES1 Progress To-Date, May 2009 through October 2011 ... ii

Table 1 Small Business Program Budget, 2009-2011 ... 5

Table 2 Mid-Sized Program Budget, 2010-2011 ... 5

Table 3 Site Visit Findings... 11

Table 4 Completed Projects by Month, November 1st 2010 through September 30th 2011 ... 13

Table 5 Program Progress To-Date, May 2009 through October 2011 ... 14

Table 6 Internet Marketing Updates, November 2010 through June 2011 ... 15

Table 7 Outreach and Events, November 2010 through June 2011 ... 16

Table 8 Participant Satisfaction with Program, Small Business n=83 ... 19

Table 9 Participant Satisfaction with Program, Mid-Sized Business n=18 ... 19

List of Figures

Figure 1 Commercial Lighting Program Logic Model ... 7

Figure 2 Participant Utilization of Zero Percent Financing ... 9

Figure 3 Length of Time between the Enrollment Process and Completed Installation ... 10

Figure 4 Business Type of Completed Projects November 1st 2010 through September 30th 2011 ... 13

Figure 5 Likelihood of Customer Purchasing Equipment without the Utility Incentive ... 14

Figure 6 How Customers First Learned of the Program, Small Business, n=83 ... 17

Figure 7 How Customers First Learned of the Program, Mid-Sized Business, n=18 ... 17

Figure 8 Reasons Participants Would Recommend the Program ... 19

Figure 9 Reasons Participant Would Recommend Installation Contractor ... 20

Figure 10 Participants Suggestions for Program Improvements ... 21

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Executive Summary

Applied Energy Group, Inc (“AEG”) was retained by Central Hudson Gas & Electric (“Central Hudson” or “Company”) to conduct a process evaluation of its Small and Mid-Sized Commercial Lighting Programs. The Small and Mid-Sized Commercial Electric Programs, operational since May 18, 2009, offered

incentives to non-residential electric customers to purchase and install a variety of energy efficiency equipment including motors, HVAC equipment, and lighting. Following the initial process evaluation performed by AEG in 2009 and 2010, the programs were restructured and the Small and Mid-Sized Commercial Lighting Programs were re-launched November 1, 2010.

The Small and Mid-Sized Commercial Lighting Programs encourage small and mid-sized commercial customers to replace current interior lighting with energy efficient lighting and lighting controls. Participants receive a free energy audit conducted by Alliance Energy Solutions (“Alliance”), the third-party program implementer. Incentives cover up to 70 percent of the equipment and installation costs. A financing program initiated by Central Hudson and approved by the New York Department of Public Service (“DPS”) provides zero percent financing to cover the remaining equipment and installation costs. AEG designed the 2010 – 2011 process evaluation to examine the restructured programs processes and customer responses to the programs. The evaluation identifies methods for gathering data and

measuring program results, and makes recommendations for program improvements. To arrive at the final recommendations, AEG performed the following tasks:

• Reviewed program materials and data. • Reviewed program tracking methods.

• Updated program logic model and assessed program flow.

• Conducted interviews with Central Hudson staff and third-party program implementer, Alliance

Energy Solutions.

• Conducted a focus group with installation contractors.

• Conducted surveys and site visits with participating customers.

Program Accomplishments

The Small and Mid-Sized Commercial Electric Programs are on target to meet the New York DPS approved ex ante energy savings goals, based on energy savings estimates derived from the New York

Technical Manual.1 The Mid-Sized Commercial Program has exceeded energy savings, achieving 121

percent of the ex ante 10,676 MWh goal. The Small Commercial Program has achieved 75 percent of the ex ante 40,266 MWh goal. An impact analysis to determine actual energy and demand savings achieved through the program will be completed in 2013.

1

New York Evaluation Advisory Contractor Team and TecMarket Works. (October 2010). New York Standard Approach for Estimating Energy Savings from Energy Efficiency Programs. Prepared for the New York Department of Public Service.

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Table ES1 Progress To-Date, May 2009 through October 2011

Indicator Small Mid-Sized Combined

Energy Savings (MWh) 30,414 12,887 43,301 2009 to 2011 Energy Savings Goals (MWh) 40,266 10,676 50,942

Summary of Key Findings

The Small and Mid-Sized Commercial Programs have performed well since the restructuring in November 2010. Participation has increased, due to the incentives and financing as well as Central Hudson efficiency program staff, Alliance and the lighting installation contractors

Other key findings include:

• Between 5,000 and 6,000 potential customers have been made aware of the programs. • Approximately 2,500 audits have been conducted.

• Approximately 1,300 customers have participated in the programs.

• Approximately 75 percent of mid-sized and 85 percent small commercial participants would not

have participated in the programs without Central Hudson’s incentive.

Marketing

The programs are driven by the Alliance sales and marketing team and Central Hudson outreach to community organizations and local businesses. According to the survey AEG administered to

participating businesses, approximately half (48 percent) of respondents learned about the programs from Alliance Energy Solutions or Central Hudson. This was followed by word of mouth (24 percent). Contractors are recruited through multiple channels, primarily Alliance and customer and Central Hudson recommendations.

Program Satisfaction

Overall, participating businesses and contractors are satisfied with the Small and Mid-Sized Commercial Lighting Programs. The majority of participating businesses (87%) noted they would recommend the programs and their contractor to other businesses. The lighting contractors like that the programs offer great exposure for their businesses as a means to get increase business and provides cash flow during difficult economic times.

Participants and contractors recommended offering financial incentives for additional energy efficient measures, primarily additional lighting measures, such as exit signs, occupancy sensors and outside lighting, and heating, ventilation and air conditioning (“HVAC”) measures.

Recommendations

AEG has several recommendations on how to improve the programs. These include:

Host a Workshop(s) with Alliance and Installation Contractors

The overall participation process is well structured; both participating businesses and lighting contractors are satisfied with the programs. Additionally, the lighting contractors have found that Alliance adheres to its motto of “Plan, Do, Check and Adjust” and is very responsive to any program issues or concerns. However,

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participants noted that more knowledgeable staff should be conducting the audits and the contractors noted that the Alliance salesperson conducting the audit has, on occasion, ordered the incorrect type of lighting equipment or number of fixtures.

We recommend that Alliance and Central Hudson host a workshop for the Alliance salespeople and installation contractors. The workshop should:

• Review the Program and Participation Process. The Alliance salespeople and lighting

contractors need to be well-versed in the program requirements and processes.

• The Alliance salesperson should explain the program highlights and overall process to

prospective participants prior to conducting the lighting audit.

• After the audit, the Alliance salesperson should review the audit results and proposed

scope of work with the prospective participant. The salesperson should also fully describe the program processes (e.g. the lighting equipment will be directly delivered to the site by Grainger), including the timeline and the parties involved.

• The installation contractor should be able to explain all program requirements and

processes to the participant, as well as be able to provide an Alliance contact for any additional issues.

• Review the Lighting Audit Process. The Alliance salespeople and lighting contractors need to

discuss prior issues with lighting audits, particularly regarding the type or quantity of lighting ordered. A sample audit should be reviewed and discussed to determine the origin of these issues and solutions to improve the audit process.

Alliance and Central Hudson should closely monitor installations to ensure that these issues are

resolved. The goal is not to completely eradicate errors, but to streamline the participation process and increase communications so the number of issues is minimized. If the issues continue, additional steps need to be taken to rectify the issue.

Assign Projects to an Alliance Project Manager

Participating businesses requested that program communications be simplified. Participants communicate with up to four different groups throughout the program process, including Alliance, Central Hudson, the lighting contractor and Honeywell. We recommend that Alliance assign a project manager to each lighting project to act as the participating customer’s primary contact for the duration of the project. Participants should also be encouraged to contact the project manager with any concerns or questions about the program.

Review Program Offerings and Conduct a Baseline Equipment Study

Participating businesses and installation contractors recommended that Central Hudson consider offering incentives for additional energy efficient measures, primarily additional lighting measures, such as exit signs, occupancy sensors, outside lighting and HVAC measures. We recommend that, within the next year, Central Hudson conduct a baseline equipment study to identify the type, age and efficiency level of equipment currently being used by small and mid-sized businesses within Central Hudson’s territory. The study will inform program design changes and measures to be considered for inclusion in Central Hudson’s Commercial Lighting Programs.

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Modify the Data Tracking System and Reporting Format

Alliance has upgraded its tracking system to its current Access-based system. However, Central Hudson finds that there could be a simpler method to tracking program expenses and projected savings. Manipulating the data from Alliance’s reporting format to the format needed for the monthly tracking dashboard for the New York DPS is time consuming. We recommend that Alliance modify the reporting format of the tracking system to minimize Central Hudson’s time commitment associated with the New York DPS reporting requirements.

Alliance currently tracks the number of audits as well as the projects installed, energy savings, incentives and closing rate by salesperson. We recommend that Alliance also track the number of audits

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1.

Introduction

Applied Energy Group, Inc (“AEG”) was retained by Central Hudson Gas & Electric (“Central Hudson” or “Company”) to conduct a process evaluation of its Small and Mid-Sized Commercial Lighting Programs. The programs are part of Central Hudson’s effort to help the State of New York meet its goal of reducing statewide electricity usage by 15% by 2015.2

Central Hudson is a regulated transmission and distribution utility serving approximately 300,000 electric customers and 75,000 natural gas customers in New York State’s Mid-Hudson River Valley, which extends from the suburbs of metropolitan New York City to the Capital District of Albany. The Small and Mid-Sized Commercial Electric Programs, operational since May 18, 2009, offered incentives to non-residential electric customers to purchase and install a variety of energy efficiency equipment including motors, HVAC equipment and lighting. Following the initial process evaluation performed by AEG in 2009 and 2010, the programs were restructured and the Small and Mid-Sized Commercial Lighting Programs were re-launched November 1, 2010.3

The Small and Mid-Sized Commercial Lighting Programs encourage small and mid-sized commercial customers to replace existing inefficient lighting with energy efficient interior lighting and lighting controls. Participants receive a free energy audit conducted by Alliance Energy Solutions (“Alliance”), the third-party program implementer. Incentives cover up to 70 percent of the equipment and installation costs. A financing program initiated by Central Hudson and approved by the New York Department of Public Service (“DPS”) provides zero percent financing to cover the remaining equipment and installation cost. From the customer perspective, the Commercial Lighting Program is a single program offering identical incentives and measures, utilizing one marketing plan, and a single

implementation contractor. The program remains separate for Central Hudson program tracking and DPS reporting purposes only. Therefore, the Small and Mid-Sized Programs are evaluated jointly.

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Process Evaluation Approach

AEG designed the 2010 – 2011 process evaluation to examine the restructured programs processes and customer responses to the programs. The evaluation identifies methods for gathering data and

measuring program results, and makes recommendations for program improvements. Impact estimates are not a part of this evaluation. However, some estimates of the impacts have been provided in the report. To arrive at the final recommendations in this report, AEG undertook the following research activities.

2

The New York State DPS established the energy efficiency portfolio standard on June 23, 2008. As part of this portfolio standard, the DPS mandated New York State gas and electric utilities and the New York State Energy Research and Development Authority (NYSERDA) to administer energy efficiency programs.

3

The Small Commercial Program targets non-residential customers with an average electric demand of less than 100 kW, based on average monthly usage. The Mid-Sized Commercial Program targets non-residential customers with an average electric

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1.1.1 Program Materials and Data Review

AEG reviewed current program documents and processes for this analysis including the program logic model, marketing activities, program implementation plan, and program performance data. The review served as the basis for understanding whether the programs have been implemented as planned and is on track to meet energy savings goals.

1.1.2 Program Tracking and Database Review

AEG reviewed current program tracking and reporting, including the weekly and monthly reports provided by the third-party implementer, summarizing activities to-date and the weekly tracking of forecasted projects, utilized to closely monitor incentives and program spending.

1.1.3 Program Logic Model

AEG updated the program logic model based on interviews with Central Hudson program staff and the third-party implementer. The model shows the linkages among the program’s activities, outputs, key program stakeholders and outcomes and highlights potential external influences and program inputs.

1.1.4 Central Hudson Staff Interview

AEG conducted a comprehensive, group interview with Central Hudson program staff in June 2011 to get staff impressions of program performance, marketing and customer awareness, and opportunities for program improvements. Individual interviews with program staff, as well as informal discussions around program performance, were conducted between June and August 2011. The individual interviews focused on program design and delivery issues, program performance, potential areas of improvements and overall program effectiveness.

1.1.5 Third-Party Implementer Interview

AEG interviewed Alliance Energy Solutions (“Alliance”) in June 2011. The interview provided information on program implementation activities, program data and tracking methods, the relationship between the program implementation contractor and installation contractors, and barriers to increased participation. AEG also obtained detailed information on program performance.

1.1.6 Installation Contractor Focus Group

AEG conducted a focus group with nine installation contractors on August 9, 2011. The focus group discussion provided information on program awareness and participation, program operations, the relationship between the program implementation contractor and installation contractors, application processing and barriers to participation. The installation contractor focus group guide can be found in Appendix A.

1.1.7 Participating Customer Surveys

AEG administered a 10 to 12 minute telephone survey to a sample of small and mid-sized business participants to assess program experience and awareness, customer satisfaction, barriers to

participation, free ridership and areas for potential program improvement. The participating customer survey guide can be found in Appendix B.

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Between November 1, 2010 and June 30, 2011, 940 small and mid-sized businesses participated in the Small and Mid-Size Commercial Lighting Programs. Alliance provided data for all 940 participants, including business name, account number and telephone number. AEG scrubbed the participant data, removing duplicate electric Central Hudson account numbers from the participant list. The scrubbed participant data included 673 unique accounts, 610 small business customers and 63 mid-sized business customers. AEG calculated the small and mid-sized sample sizes at a 90 percent confidence interval with an error margin of +/-10 percent. The Small Commercial Lighting Program sample size was calculated at 61 and the Mid-Sized Commercial Lighting Program sample size was calculated at 18. Participants were then randomly assigned a unique identifier using Microsoft Excel’s random number generator. The program participants were contacted based on the unique identifier, beginning with the smallest number.

Eighty-three (83) small business surveys were completed out of 215 businesses contacted; therefore, the survey response rate was 39 percent for small businesses. Eighteen (18) mid-sized business surveys were completed out of 63 businesses contacted; therefore, the survey response rate was 28 percent for mid-sized businesses.

AEG conducted site visits of 10 small and mid-sized business participants to assess program experience and customer satisfaction as well as verify the lighting equipment installed, as compared to Alliance’s records. The site visit sample, determined based on logistics, budget and time constraints, represents 1.1 percent of program participants. The site visits were are not considered representative of the entire participant population, but a statistically significant sample will be selected for site visits and metering as part of the proposed Small and Mid-Sized Business Commercial Lighting Program Impact Evaluation. A small sampling of participants were selected for on-site visits to verify the information gathered in file reviews, participant telephone surveys, implementation contractor interviews, and contractor focus groups. As such the site visits were a component of program quality assurance practices. The site visits served to confirm the initial findings of the other data gathering aspects of the program and to identify any potential weaknesses in program delivery.

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Report Outline

This report describes the key findings from the Small and Mid-Sized Commercial Lighting Programs process evaluation and provides recommendations for program improvement. Section 2 provides a description of the programs and program logic model. Section 3 presents the programs performance to-date. Sections 4 and 5 discuss program marketing and tracking, respectively. Sections 6 and 7 describe program satisfaction and the opportunities for program improvement. Finally, Section 8 discusses the evaluation findings and provides recommendations.

2.

Program Description

The Small and Mid-Sized Commercial Electric Programs, operational since May 18, 2009, offered incentives to non-residential electric customers to purchase and install a variety of energy efficiency

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equipment including motors, HVAC equipment and lighting.4 The programs were restructured and the Small and Mid-Sized Commercial Lighting Programs were launched November 1, 2010.

The Small and Mid-Sized Commercial Lighting Programs encourage small and mid-sized commercial customers to replace existing inefficient lighting with energy efficient interior lighting and lighting controls. Through a competitive bidding process, Central Hudson contracted with an exclusive turn-key service provider, Alliance Energy Solutions (“Alliance”). Participants receive a free energy audit,

conducted by Alliance. The detailed audit report identifies efficient lighting measures and potential savings, installation costs and anticipated payback. Eligible measures include permanent interior lighting fixtures and ballasts such as T8 and T5 lamps, LED exit signs and refrigerator case lighting, pulse-start metal halides, occupancy sensors, and controls.

Incentives cover up to 70 percent of the equipment and installation costs. Incentives are assigned directly to Alliance, so that the utility incentives are reduced directly from the sale price of the project. The sale price of the project is calculated based on the number of measures installed, the

pre-determined prices of eligible measures, and installation costs. A financing program initiated by Central Hudson and approved by the DPS provides zero percent financing to cover the remaining equipment and installation cost.

The Small Commercial Lighting Program targets non-residential customers with an average electric demand of less than 100 kW, based on average monthly usage. The Mid-Sized Commercial Lighting Program targets non-residential customers with an average electric demand between 100 and 350 kW, based on average monthly usage. The Small and Mid-Sized programs appear to be one program from the customer perspective, offering identical incentives and measures, utilizing one marketing plan, and utilizing same implementation contractor and administrative staff at Central Hudson. The program remains separate for Central Hudson program tracking and DPS reporting purposes only.

As the programs’ direct installer, Alliance is responsible for:

• Providing a dedicated sales team for marketing and educating customers on the benefits of

energy efficient lighting.

• Managing installation contractors and scheduling lighting upgrades.

• Calculating, tracking and reporting program energy savings achieved for Central Hudson.

Honeywell inspects a percentage of the total projects to verify that upgrades match the performance specified in the customer-approved work order.

Central Hudson markets the commercial lighting programs through its website and bill inserts, as well as directly to business owners, operators, property owners and tenants. Representatives also participate in trade association and business organization meetings, trade fairs and other events.

4

The Small Business Program was approved on January 16, 2009 in order 08-E-1019. The Mid-Sized Business Program was approved on October 23, 2009 in order 08-E-1135.

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Program goals are to:

• Educate commercial customers and contractors about the benefits of new efficient lighting

technologies.

• Build consumer confidence in the reliability of savings estimates through an educated sales

force and highly tailored program approach.

• Effectively deploy equipment through the Central Hudson program.

• Increase program awareness and participation through improved branding, marketing and

coordination between market actors.

• Develop new partnerships with contractors to bring efficient lighting equipment to market. • Demonstrate persistent energy savings and other benefits to end-users.

2.1

Program Budget and Savings Goals

The New York DPS approved three-year program budgets (2009-2011) for the Small Commercial

Program of $12,370,031 and the Mid-Sized Commercial Program of $2,435,862. With the combined $15 million budget, the commercial lighting programs have a cumulative program energy savings target of 50,942MWh, 40,266 MWh for the small commercial program and 10,676 MWh for the mid-sized commercial program.

Table 1 Small Business Program Budget, 2009-2011

2009 2010 2011

Program and Administration $3,204,962 $4,273,283 $4,273,283 Measurement and Verification $168,682 $224,910 $224,910

Total Budget $3,373,645 $4,498,193 $4,498,193

Table 2 Mid-Sized Program Budget, 2010-2011

2010 2011

Program and Administration $1,157,024 $1,157,034 Measurement and Verification $60,897 $60,897

Total Budget $1,217,931 $1,217,931

2.2

Market Barriers

In November 2010, Central Hudson transformed the commercial electric program into a direct install program that offers only interior lighting and lighting controls incentives to small and mid-sized businesses. To encourage participation among this traditionally hard-to-reach sector, Alliance has a dedicated sales and marketing team that recruits lighting installation contractors to provide tailored proposals and pricing for each customer. There are also zero upfront costs to customers that take advantage of the program rebates and financing.

This new approach is designed to overcome barriers to participation, including:

• Limited upfront capital for businesses;

• Skepticism about the accuracy of cost-saving claims provided by contractors; and • Lack of information about energy efficient lighting equipment and technologies.

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2.3

Program Logic Model

Logic models are graphic representations of a program and its processes. Logic models make the program’s assumptions explicit, showing the causal relationships or linkages among the problem or situation the program is designed to address, the intervention (inputs and outputs), and program impact (short, medium and long-term outcomes). Models also help to identify partnerships that are critical to the program’s performance.

In this logic model, the activities are oriented sequentially across the top of the page from left to right. For example, the program’s infrastructure, including its advertising materials, tracking systems, program rules, and contracts must be developed before the program can be marketed and customers recruited. The performance spectrum, or program’s theory, is oriented vertically from top to bottom.

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2.3.1 Activities and Outputs

There are seven main activities in the Small and Mid-Sized Commercial Lighting Programs. Outputs derive directly from program activities and include the things the program does and the people the program reaches. Because outputs help to establish linkages between the situation the program is designed to address and the program’s intended outcomes, activities and outputs will be discussed together in this section.

Develop Program Infrastructure

Activities include gathering market knowledge, setting program goals, designing the program,

establishing program rules, developing marketing approaches and content, and establishing institutional and operating structures. As the implementation contractor, Alliance works with Central Hudson staff to design the program and develop its data tracking system. Marketing materials are developed jointly with Central Hudson staff.

Promote and Market Program

Central Hudson and Alliance’s dedicated sales and marketing team promote and market the programs to non-residential customers and installation contractors. Marketing activities include bill inserts, print and electronic advertisements, media and community events, direct mail. Promotional activities include cold and warm customer calls and lighting contractor recruitment.

Perform Lighting Audit

Alliance has a dedicated sales and marketing team that educates eligible customers on the benefits of efficient lighting and promotes the program. Participant audits are scheduled one of three ways:

1) The Alliance sales associate schedules/conducts the audit during a customer visit.

2) Customer schedules an audit by calling Central Hudson’s toll free number. During the call, the customer service representative verifies the customer’s information to ensure that they are eligible for the program.

3) Customer schedules an audit on the Central Hudson website. Customers provide their name and address to verify eligibility and are contacted by a customer service representative to schedule an audit.

Customer information is collected prior to the audit for Central Hudson program tracking purposes, including the customer’s name, address, electric account number and program eligibility. Small commercial customers must have electric demand of less than 100 kW and mid-sized commercial customers must have electric demand between 100 and 350 kW, based on average monthly usage. Eligibility is verified utilizing a Central Hudson database.

An Alliance salesperson conducts the audit and immediately generates a detailed scope of work, identifying efficient lighting measures and potential savings, installation costs and anticipated payback, during the initial customer visit. The quick turn-around minimizes the time and cost to follow-up with customers after the initial visit to schedule an audit or discuss the scope of work.

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Altogether, the salespeople conduct roughly seven or eight audits per day and sign two or three

customers per day, including customers that had not approved the work order at the time the audit was conducted.

Process Customer Work Order

Once the customer approves the final work order, Alliance submits the work order to a Central Hudson customer service representative (“CSR”) to process the customer loan request, if applicable. To receive a loan the customer must be current on their utility bill (i.e. current with their electric utility payments). The CSR verifies that the customer is current on their utility bill. If the customer is not current on their electric bill, they are given the opportunity to become current. The CSR sends the customer work order and status to the Central Hudson energy efficiency program staff for approval/rejection of the financing application. Central Hudson notifies Alliance of the approval/rejection of the financing application. Based on the survey of participating customers, 73 percent of small businesses and 89 percent of mid-size businesses utilized the zero percent financing.

Figure 2 Participant Utilization of Zero Percent Financing5

Within 24-hours of the customer approving the work order, while Central Hudson is reviewing the customer’s financing request, Alliance contacts the installation contractor and orders the lighting equipment from Grainger, Alliance’s equipment partner. If the customer does not request a specific contractor, Alliance assigns the lighting project to an installation contractor based on geographical location. The lighting retrofit kits are delivered to the customer prior to the arrival of the lighting contractor. Alliance communicates continuously with the participant throughout the installation process to troubleshoot any potential issues.

Install Lighting Measures

Alliance aims to have the installation completed within two to three weeks of the customer approving the work order; however the lag has been up to six weeks during busy times. According to the

contractors, the lag-time between audit and installation is usually less than two months. Participating customers noted that the lag-time is most often one to two months.

5

The sample size is noted by ‘n’ in the tables and figures.

0% 20% 40% 60% 80% 100%

Yes No Don't Know

Percentage of Survey Respondents

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Figure 3 Length of Time between the Enrollment Process and Completed Installation

The installation contractors are provided FedEx boxes to pack the waste. Alliance documents the

number of boxes shipped and the contents. On-site dumpsters are also made available as necessary. An Alliance project manager monitors the contractor installations, ensuring the contractor is clean and professional on the job and that the correct number of fixtures was replaced. Despite the monitoring of the Alliance project manager, during the participant surveys, participant comments ranged from “the contractor was diligent and clean” to “the contractor was sloppy and unprofessional” (see Section 7 for further discussion).

Once the installation is complete, the signed customer invoice and correct equipment counts are sent to Alliance. Alliance notifies the Central Hudson energy efficiency program staff when the installation is complete.

According to Central Hudson staff, about 40 to 50 percent of pricing proposals change from the original work order estimate. These changes are often small.

Lighting contractors in the focus group noted that the changes are often due tothe Alliance salesperson ordering the incorrect type of lighting equipment or number of fixtures (see Section 7 for further discussion). Any changes to the pricing in the final work order must be approved by the customer (customer initials changes). Seventy-six percent (37 out of 49 participants) noted that the estimated installation cost accurately reflected the actual cost at completion. Central Hudson then notifies the customer that they must begin loan repayment.

Quality Assurance

Honeywell conducts pre- and post- inspections of ten percent of completed projects to verify that the equipment upgraded matches Alliance’s records. AEG conducted site visits at 10 participating customer facilities, including 2 that had received a post-inspection by Honeywell.

0% 5% 10% 15% 20% 25% 30% 35% Don’t Know 1 year 6 months 4-5 months 3-4 months 2-3 months 1-2 months 2-4 weeks 1-2 weeks Percentage of Respondents

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Of the ten participant site visits, all fixtures, lamps and ballasts were accounted for at eight of the sites.

Two of the sites visited had a quantity and fixture type discrepancy with the project information provided by Alliance/Honeywell. Fewer fixtures were found during the site visit than were reported. Another site had an additional 3 fixtures from what Alliance reported.

Table 3 Site Visit Findings

Evaluate Program

Evaluation activities include process and impact studies. Once evaluations are conducted,

recommendations for program improvements are generated for Central Hudson and fed back into program design. Central Hudson is responsible for program filings with the DPS.

2.3.2 Outcomes

Outcomes are the result of program partners and target audiences responding to the outputs of the program. There are short-term, intermediate and long-term outcomes of the program.

Short-term Outcomes

When the programs are marketed and promoted, customers may become aware of and interested in the Commercial Lighting Program. They may also become knowledgeable about the environmental issues and costs associated with inefficient lighting.

Intermediate Outcomes

Intermediate outcomes of the programs may include increased use of the program by customers, interest in and use of other Central Hudson efficiency programs, reduced overall energy consumption, increased customer satisfaction and meeting program goals.

Long-term Outcomes

The long-term outcomes of the programs may include energy savings for Central Hudson, reduced utility emissions, and improvement in the public image of Central Hudson as a utility that responds to

customer needs and is considerate of environmental issues.

Honeywell Site Verification

Alliance Report

Correct? Notes

Site 1 Yes No Quantity and fixture type discrepancy Site 2 No Quantity and fixture type discrepancy

Site 3 Yes

Site 4 Yes

Site 5 Yes

Site 6 No Found 3 additional fixtures than reported Site 7 Yes Yes

Site 8 Yes

Site 9 Yes

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2.3.3 External Factors

There are a variety of factors outside the control of Central Hudson and its contractors that may influence the program. Documenting these factors help improve program planning by identifying important program partners, the part(s) of the issue the program can realistically influence, which evaluation measures will accurately reflect project outcomes and other needs that must be met to address this issue. The external factors are:

• Price of lighting materials • Competition for lighting

• Improvements in lighting technology • State environmental regulations

• State energy policies/efficiency program administration

3.

Program Performance

From November 2010 to September 2011, there were 1,372 completed projects under the Small and Mid-Sized Commercial Lighting Program. Small business facilities comprised the majority of completed projects, 90 percent versus 10 percent mid-sized business facilities. Approximately one-quarter of completed projects were small offices, followed by light industrial, assembly and small retail facilities. Alliance estimates that since November 2010,

• Between 5,000 and 6,000 potential customers have been made aware of the program. • Approximately 2,500 audits have been conducted.

• Approximately 1,300 customers have participated in the program.

The number of completed lighting projects has increased steadily from November 2010 through September 2011. Completed lighting projects decreased slightly during the summer months but began increasing as of September 2011. Figure 4 displays the percentage of completed projects by business type.

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Figure 4 Business Type of Completed Projects November 1st 2010 through September 30th 2011

Table 4 Completed Projects by Month, November 1st 2010 through September 30th 2011

Date Number of Projects

November 2010 13 December 2010 44 January 2011 72 February 2011 134 March 2011 147 April 2011 141 May 2011 175 June 2011 214 July 2011 139 August 2011 127 September 2011 166

The programs are on target to meet the New York DPS approved ex ante energy savings goals, based on energy savings estimates derived from the New York Technical Manual. 6 The Mid-Sized Commercial Program has exceeded energy savings, achieving 121 percent of the 10,676 MWh goal. The Small Commercial Program has achieved 75 percent of the 40,266 MWh goal. An impact analysis to

determine actual energy and demand savings achieved through the program will be completed in 2013.

6

New York Evaluation Advisory Contractor Team and TecMarket Works. (October 2010). New York Standard Approach for

0% 5% 10% 15% 20% 25% Hospital Community College Grocery Large Retail Fast Food Large Office Hotel High School Other Elementary School Full Service Restaurant Auto Repair Big Box Small Retail Assembly Light Industrial Small Office

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Table 5 Program Progress To-Date, May 2009 through October 2011

Indicator Small Mid-Sized Combined

Energy Savings (MWh) 30,414 12,887 43,301 Energy Savings Goals (MWh) 40,266 10,676 50,942

3.1

What Customers Might Have Done in Absence of the Program

In the absence of the program, most customers would not have purchased and installed the exact same equipment. An impact evaluation, to be completed in 2013, will address free ridership and spillover.

Figure 5 Likelihood of Customer Purchasing Equipment without the Utility Incentive

4.

Program Marketing

The Small and Mid-Sized Commercial Lighting Programs are driven by the Alliance sales and marketing team and Central Hudson outreach to community organizations and local businesses. Alliance’s sales and marketing team works directly with potential participants, educating customers on the benefits of energy efficient lighting and the program.

Lighting contractors feel that the program is driven by the Alliance sales team, bringing in 95 to 99 percent of participants. “If the salesperson didn’t knock on

the door, the customer wouldn’t know [about the program].”

The Alliance sales team utilizes a combination of cold and warm calls to enroll customers. Cold calls to customers not previously contacted about the program account for approximately 80 percent. The sales team identifies the warm calls, customers previously contacted about the program, through a

combination of Grainger, Alliance’s partner and lighting equipment provider, and Central Hudson. 6% 6% 83% 6% 6% 2% 4% 13% 73% 1% 0% 20% 40% 60% 80% 100% Very Likely 4 3 2 Very Unlikely Don’t Know/Refused Percentage of Respondents

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4.1

Central Hudson Marketing Activities

Central Hudson’s marketing activities include bill inserts, print and electronic advertisements, media and community events, direct mail and contractor recruitment.

In 2010, Central Hudson partnered with Sustainable Hudson Valley in the Ten Percent Challenge in Red Hook, NY. The initiative challenges communities (both residences and businesses) to use 10 percent less energy within a year’s time and to get 10 percent of peers involved.

Internet marketing incorporates social media and Central Hudson’s websites. Central Hudson continually updates their websites, CentralHudson.com and SavingsCentral.com, and posts customer testimonials. The customer testimonials can be viewed by non-residential customers to learn about the benefits of the program from business peers. Email blasts specifying the commercial lighting program were sent to approximately 3,000 customers on December 15, 2010 and 2,000 customers on January 6, 2011. All public outreach events are posted on www.SavingsCentral.com/events.html.

Table 6 Internet Marketing Updates, November 2010 through June 2011

Marketing Updates

November 2010 • Established a detailed FAQ page on the Central Hudson webpage • Posted three customer testimonials

December 2010

• Created a portal for customers to request a free, on-site energy audit through the Central Hudson webpage

• Posted one customer testimonial • Posted Facebook entries

January to March 2011

• Posted several customer testimonials

• Posted Facebook entries on February 24th, March 19th and March 25th • Posted Twitter entries on February 24th, March 19th and March 25th April to June 2011 • Posted Facebook entry on April 28th

Direct mailers are sent out to non-residential customers on a regular basis. Commercial lighting

postcards were mailed to customers on November 19th, December 15th and January 15th. Postcards were also mailed to members of the Ulster County Regional Chamber of Commerce on January 31, 2011. Bill insert advertisements promoting the program were sent in March and April 2011.

A commercial lighting upgrade advertisement was included with an envelope of coupons and mailed to 100,000 customers during the second week of November 2010. In the second quarter of 2011, Central Hudson sent letters of support signed by the Mayor of Kingston to local business owners. The letters of support were accompanied by a news release sent to Kingston media outlets.

Print advertisements and news releases included:

• On December 2,2010, the Poughkeepsie Journal ran an editorial about the program. • The December newsletter of the Greater Southern Dutchess Chamber of Commerce ran an

article about a business customer’s, Beekman Golf Club, participation and satisfaction with the commercial lighting program.

• On January 14, 2011, Central Hudson published a news release on the City of Poughkeepsie’s experience with the commercial lighting program.

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• On January 16, 2011, the Poughkeepsie Journal featured an article about the City of Poughkeepsie’s experience with Central Hudson’s commercial lighting program.

• On March 17, 2011, Mid Hudson News featured an article on how the Town of Fishkill was taking advantage of Central Hudson’s commercial lighting program for government owned buildings.

• The spring 2011 edition of the Rhinebeck Area Chamber of Commerce Publication featured a quarter-page advertisement for the commercial lighting program.

Table 7 Outreach and Events, November 2010 through June 2011

Date Event Location Audience

Oct. 5 North Dutchess Career/Business event Red Hook Business community, students Oct. 21 Buy Local Business Expo Hudson Business community

Oct. 27 Dutchess Regional Chamber Marketplace Poughkeepsie Business community Nov 30 LaGrange Rotary Club Poughkeepsie Business community

Dec. 7 Orange County Partnership Annual Event New Windsor Economic development community Dec. 14 HVEDC Hudson Valley Showcase White Plains Commercial landlords

Jan. 19 Rosendale Chamber Rosendale Chamber members Feb. 3 Ulster Chamber Business Roundtable Kingston Chamber community Apr. 6 New Paltz Chamber Luncheon Kingston Business community Apr. 13 Commercial Lighting Breakfast Kingston Business community Apr. 27 Renewable Energy Symposium at the Cary

Institute

Millbrook Chamber community May 17 Ulster Co. Fireman’s Association Rosendale Firehouses

May 18-20 Kingston Outreach/Audits Kingston Small businesses May 27 Orange Co. Sustainability Summit Newburgh Business community

Central Hudson is an active participant in the Energy Efficiency Program Administrator Collaborative (“EEPAC”) with NYSERDA and other New York State utilities. Central Hudson has participated in numerous conference calls and meetings with other New York State utilities to discuss program

operation and structure to minimize market confusion and promote best practices. Additionally, Central Hudson is represented on the Energy Efficiency Portfolio Standard (“EEPS”) Implementation Advisory Group (“IAG”) and Evaluation Advisory Group (“EAG”) as well as various subcommittees committed to accomplishing tactical goals.

4.2

How Participants Learned About the Programs

Participating businesses learned about the programs through multiple channels, but the most frequent responses were Central Hudson employees, Alliance Energy Solutions and through word of mouth. The participants that specified the word of mouth source detailed a variety of sources, including a bank, landlord, vendor, public service supervisors, and local government representatives, among others.

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Figure 6 How Customers First Learned of the Program, Small Business, n=83

Figure 7 How Customers First Learned of the Program, Mid-Sized Business, n=18

4.3

How Contractors Learned About the Programs

Alliance works primarily with thirteen registered lighting contractors. However, they will work with other contractors based on a customer request. Contractors are recruited through multiple channels, but primarily through Alliance, customer recommendations and Central Hudson recommendations based on participation in other Central Hudson programs.

5.

Data Tracking

The Small and Mid-Sized Commercial Lighting Programs are tracked by Alliance, Honeywell and Central Hudson. Central Hudson submits a monthly, quarterly and annual scorecard report to the New York DPS with each program’s progress to-date, including participation, energy savings and budget.

• Alliance tracks program participation, energy and demand savings, audits, completed projects

and projects in the queue.

0 5 10 15 20 25

Direct mail Email Solicited by a marketing group Flyer Central Hudson bill insert Community event/meeting/presentation Newspaper/magazine ad CentralHudson.com Grainger From the Installation Contractor Don't Know From Alliance Energy Solutions Word of mouth (friend/business associate) Central Hudson employee

Number of Respondents

0 1 2 3 4 5 6 7

CentralHudson.com Newspaper ad Central Hudson employee Word of mouth (business associate) From Alliance Energy Solutions

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• Honeywell tracks the program inspections. • Central Hudson tracks participant financing.

Alliance’s tracking system has been upgraded from an Excel-based system utilized in November 2010 to the current Access-based system. Alliance supplies Central Hudson with daily, weekly and monthly reports. A daily report tracks recent project sales. A weekly report tracks the status of recent projects, both committed and completed, allowing Central Hudson and Alliance to closely monitor the anticipated energy savings and incentive commitments. The report includes projected monthly gross MWh by installation contractor as well as the projected gross MWh and incentives for each the Small and Mid-Sized Business Lighting Programs broken-out by the following categories:

• Unavailable Project: the participant has signed the project work order but the paperwork is not

in order.

• Available Project: the participant has signed the project work order and the project has been

released into production (materials are ordered).

• Installed/Not Invoiced Project: installation has been completed and awaiting final paperwork. • Invoiced Project: the project installation and paperwork have been completed.

• Projected Week End: the projects projected to be installed during the current week. • Projected Month End: the projects projected to be installed during the current month.

A monthly report summarizes the Small and Mid-Sized Business Lighting Programs, providing the energy savings, demand savings and incentives (including financing commitments) for each program. Alliance also tracks the number of sales audits and number of fixtures by installation contractor as well as energy savings, incentives and closing rate by salesperson.

Honeywell inspects ten percent of completed projects, assessing program experience and customer satisfaction as well as verifying the lighting equipment installed, as compared to Alliance’s records (see Appendix C for an inspection template). The inspection includes a pre- and post- project verification of the lighting equipment, energy and demand usage, and annual lighting hours. Quality assurance reports documenting Honeywell’s finding are submitted to Alliance on a regular basis.

6.

Program Satisfaction

Overall, participants and contractors are very satisfied with the Small and Mid-Sized Commercial Lighting Programs. Based on the participant survey, the areas that may be improved include experience with Alliance, the amount of information provided about the program and the contractor who

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Table 8 Participant Satisfaction with Program, Small Business n=83

Very Satisfied ←−−−−−−−−−−−−→ Not Satisfied

5 4 3 2 1 DK

Overall program 76% 20% 1% 2% 0% 0%

Experience with Alliance Energy Solutions 64% 25% 8% 1% 0% 1% Amount of time it took for the application to be approved by

Central Hudson 67% 25% 1% 1% 1% 4%

Amount of incentive money received from Central Hudson 69% 19% 5% 0% 0% 7% Amount of information provided about the Program 65% 30% 2% 1% 0% 1%

Required enrollment forms 63% 25% 6% 0% 0% 6%

The contractor who performed the work 69% 20% 7% 4% 0% 0%

Table 9 Participant Satisfaction with Program, Mid-Sized Business n=18

Very Satisfied ←−−−−−−−−−−−−→ Not Satisfied

5 4 3 2 1 DK

Overall program 56% 22% 17% 0% 0% 0%

Experience with Alliance Energy Solutions 56% 22% 11% 6% 6% 0% Amount of time it took for the application to be approved by

Central Hudson 44% 33% 11% 0% 0% 11%

Amount of incentive money received from Central Hudson 44% 33% 0% 0% 0% 22% Amount of information provided about the Program 67% 11% 17% 0% 0% 6%

Required enrollment forms 61% 28% 6% 0% 0% 6%

The contractor who performed the work 56% 28% 6% 0% 6% 6% Participants noted that the new lighting is much better and brighter than the lighting replaced and that the incentives and available financing are excellent.

“Very professional and they covered 70% of the cost. No brainer.”

Between 94 and 99 percent of businesses, mid-size and small business respectively, would recommend the programs to others.

Figure 8 Reasons Participants Would Recommend the Program

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

I have recommended it It’s a good program It saves electricity/we need to conserve it It saves money It’s easy to do Don't know/refused

Percentage of Respondents

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Based on the participant survey, 83 percent of mid-sized businesses and 88 percent of small businesses are satisfied with their installation contractor and would recommend them to others. However, the participant comments varied widely from “the contractor was diligent and clean” to “the contractor was sloppy and unprofessional.”

Figure 9 Reasons Participant Would Recommend Installation Contractor

The lighting contractors have found that the programs offer great exposure for their businesses as a means to get new clients and provide cash flow during difficult economic times. The participant incentives coupled with the financing offers a good selling point for potential clients.

7.

Opportunities for Program Improvement

The Small and Mid-Sized Business Lighting Programs are successful and effective programs. As of August 2011, the mid-sized business program was above energy savings goal and the small business program was at 57 percent of the energy savings goal. Overall, customers and contractors are very satisfied with the program and the resulting efficiency gains.

Participants have found that the programs are simple and a win-win for both the customer and Central Hudson.

“Great lighting that is virtually free, customer reaps all of the benefits.”

Between 70 and 80 percent of participants feel that the programs are good as is and did not have suggestions for improvements. Participant program improvement suggestions generally involved the

0% 5% 10% 15% 20% 25% 30% 35% 40% Helpful/informative/answered

questions/communicated with me Smooth/no problems Very nice/friendly/courteous Professional/easy to work with Fast/efficient/quick installation Good job done/quality work/happy/satisfied Timely/came when they said/finished on time

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participation process and communications, the following comments were provided during the telephone survey:

“Improve timeliness of program processes.”

“Simplify customer communications. I communicated with four different people throughout the process…this could be limited to only one contact.”

“More knowledgeable staff conducting audits.” “Better follow-up by the contractors.”

Figure 10 Participants Suggestions for Program Improvements

Program participants and contractors recommended offering financial incentives for additional energy efficient measures, primarily additional lighting measures and heating, ventilation and air conditioning (“HVAC”) measures. Additional lighting measures included exit signs, occupancy sensors and outside lighting.

0% 20% 40% 60% 80% 100%

(Don’t Know/Refused) Make it available to more people More publicity/advertise it Faster processing of paperwork Better communication/easier to reach people at

Central Hudson

No suggestions/good the way it is

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Figure 11 Participant Suggestions for Additional Incentive Offerings

The lighting contractors find that working with Alliance has gotten easier and smoother since the

restructuring in November 2010. Early coordination issues have been resolved and the current program is well-coordinated with the customer. Alliance excels at project management. The contractors noted that very few participants have complaints.

“Most customers are very happy with the program and are excited to have the work done.”

Overall, the lighting contractors are satisfied with the programs and program improvement suggestions were limited to one area, equipment ordering errors. Alliance contacts the lighting contractors after the

customer has approved the work order and the equipment has been ordered from Grainger. However, the Alliance salesperson conducting the audit has, on occasion, ordered the incorrect type of lighting equipment or number of fixtures. The equipment ordering errors, when they occur, vary widely and have decreased over time.

According to the installation contractors, equipment issues early on in the program occurred 20-25 percent of the time but have decreased to 10-15 percent

of the time.

Equipment ordering issues on small jobs are particularly problematic because of time constraints. Contractors are on larger jobs for longer periods of time, so there is more time to get new fixtures if there are any errors. Contractors contact Alliance regarding discrepancies. Small problems can be addressed by the contractors, but large errors (i.e. multiple fixtures) require a new work order.

8.

Findings, Conclusions and Recommendations

8.1

Program Findings

The Small and Mid-Sized Commercial Programs have performed well since the restructuring in November 2010. The programs are on target to meet the New York DPS approved ex ante energy savings goals, based on energy savings estimates derived from the New York Technical Manual. An

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

Don't Know/Refused Refrigerator Systems Motors & drives Heating, ventilation & air conditioning

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impact analysis to determine actual energy and demand savings achieved through the program will be completed in 2013. The program incentives and financing are influencing non-residential customer participation in the program. Approximately 75 percent of mid-sized and 85 percent small commercial participants would not have participated in the program without Central Hudson’s incentive.

8.1.1 Program Performance

The Small and Mid-Sized Commercial Programs have performed well since the restructuring in November 2010. Participation has increased, due to the incentives and financing as well as Central Hudson efficiency program staff, Alliance and the lighting installation contractors

Other key findings include:

• Between 5,000 and 6,000 potential customers have been made aware of the programs. • Approximately 2,500 audits have been conducted.

• Approximately 1,300 customers have participated in the programs.

• Approximately 75 percent of mid-sized and 85 percent small commercial participants would not

have participated in the programs without Central Hudson’s incentive.

8.1.2 Program Marketing

The programs are driven by the Alliance sales and marketing team and Central Hudson outreach to community organizations and local businesses. According to the survey AEG administered to

participating businesses, approximately half (48 percent) of respondents learned about the programs from Alliance Energy Solutions or Central Hudson. This was followed by word of mouth (24 percent). Contractors are recruited through multiple channels, primarily Alliance and customer and Central Hudson recommendations.

8.1.3 Program Satisfaction

Overall, participating businesses and contractors are satisfied with the Small and Mid-Sized Commercial Lighting Programs. The majority of participating businesses (87%) noted they would recommend the programs and their contractor to other businesses. The lighting contractors like that the programs offer great exposure for their businesses as a means to get increase business and provides cash flow during difficult economic times.

Participants and contractors recommended offering financial incentives for additional energy efficient measures, primarily additional lighting measures, such as exit signs, occupancy sensors and outside lighting and HVAC measures.

8.2

Recommendations

AEG has several recommendations on how to improve the program. These include:

8.2.1 Host a Workshop(s) with Alliance and Installation Contractors

The overall participation process is well structured; both participating businesses and lighting contractors are satisfied with the programs. Additionally, the lighting contractors have found that Alliance adheres to its motto of “Plan, Do, Check and Adjust” and is very responsive to any program issues or concerns. However,

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