2008 Residential & Small Commercial Standard Offer Program

Description

TNMP is offering a program promoting energy efficiency among residential and small commercial electricity customers in our Texas service area. This program has been developed to comply with the Public Utility Commission of Texas Substantive Rule §25.181, relating to the Energy Efficiency Goal, implementing Senate Bill 7 enacted by the State Legislature in May 1999.

The Residential and Small Commercial Standard Offer Program provides incentives for the installation of a wide range of measures that reduce customer energy costs, reduce peak demand and save energy for residential and small commercial customers. Incentives are paid to Project Sponsors, which may be Energy Service Companies, HVAC and other energy conservation firms, or small commercial customers.

TNMP has established standardized savings values for a wide range of measures (called "deemed" savings values). If a deemed savings value has not been established for a qualifying small commercial energy efficiency measure, then incentives may be paid on the basis of measured and verified peak demand and energy savings.

Program Objectives

The primary objective of this program is to achieve cost-effective reduction in peak summer demand. Additional objectives of the program are to:

• Encourage private sector delivery of energy efficiency products and services
• Achieve customer energy and cost savings
• Significantly reduce barriers to participation by streamlining program procedures and measurement and verification (M&V) requirements
• Encourage participation by a wide range of service providers

Program Pricing

Standard incentives are offered for demand and energy savings at residential and small commercial customer sites. Higher incentives are available for "Hard-to-reach" customers, defined as those customers with a total household income of less than 200% of current federal poverty guidelines.

Incentive Levels:

Eligible Project Sponsors

Any entity meeting the application requirements that installs eligible residential energy efficiency measures at a customer site with residential electricity distribution service from TNMP is eligible to participate in the program as a Project Sponsor.

In addition, any third-party entity meeting the application requirements that installs eligible energy efficiency measures at a non-residential customer site with a maximum demand that does not exceed 100 kW is eligible to participate in the program as a Project Sponsor. However, if a commercial customer owns multiple sites or facilities in TNMP's distribution service area, and the total demand associated with these facilities does not exceed 250 kW, they may participate in the Small Commercial program. Project Sponsors will be required to demonstrate a commitment to fulfilling program objectives and competency in completing the proposed project. Project Sponsors will be required to submit the following information as part of the application process:

• A description of the Project Sponsor
• Evidence of credit rating
• Proof of applicable insurance, licenses and permits (if applicable)
• No Project Sponsor may receive more than 20% of TNMP's annual Residential and Small Commercial Standard Offer Program incentive budget

Measures

Project Sponsors may install any measure for which a deemed savings value has been provided, including appliances, water heating, lighting, space conditioning, and building shell measures. Project Sponsors may propose other measures, provided they meet these and other requirements as specified in the program documentation:

• Measure must produce a measurable and verifiable electric demand reduction and produce electricity consumption savings.
• Measure must produce savings through an increase in energy efficiency or a substitution of another energy source for electricity.
• Renewable energy measures meeting the requirements of Subst. R. §25.181, relating to the Energy Efficiency Goal may qualify for an incentive.
• Measure must have a minimum useful life of 10 years.

The following measures are excluded from consideration in the program:

• Measures that involve self-generation or cogeneration, except for renewable DSM technologies.
• Measures that rely on changes in customer behavior and require no capital investment.
• Measures that result in negative environmental or health effects.

Measurement and verification may be used in lieu of the deemed savings values adopted by TNMP, with certain restrictions. The Project Sponsor is responsible for all M&V costs and will be responsible for submitting documentation of all measure installations.

TNMP will inspect projects to verify that measures are installed and capable of performing their intended function. Inspection results ratios will be applied to adjust requested incentive amounts.

Program Process

Application

Potential Project Sponsors must complete an on-line application to participate in the program. Approval of the application will allow project sponsors to reserve funding for individual projects. Applications will be accepted only via the Internet and on a first-come, first-served basis.

Project Sponsors participating in the program will be required to sign a standard offer agreement (SOP Agreement) with TNMP. The terms of the agreement will be standard for all participants; TNMP will not entertain proposed changes to the standard contract language. A copy of the SOP Agreement may be downloaded from this Web site.

Application Schedule

TNMP will begin accepting applications for its 2008 Large and Small Projects Residential/Small Commercial and Residential/Hard-to-Reach Standard Offer Programs according to the following schedule. Project Applications will be accepted on a first-come, first-served basis until the Program Incentive Budget has been committed.

Payment

After each project is installed, documented, and accepted, the Project Sponsor will receive payment according to whether deemed or measured savings measures are installed. Deemed savings measures will be paid at 100% of their deemed savings amount, subject to inspection provisions. Measured savings measures will receive an initial payment that represents 40% of the total estimated incentive payment. After required performance-period site inspections are complete, the Project Sponsor will receive the remaining incentive payment as adjusted (up to 60% of the total estimated incentive payment).

Customer Protection

A simplified, plain language disclosure of customer provisions required by Subst. R. §25.181(n), relating to the Energy Efficiency Goal, has been developed and approved by the Commission for use by energy efficiency service providers. Project Sponsors will be required to share this document with participating customers. A copy of this document ("Customer Disclosure Form") may be downloaded from this Web site.