Presentation Transcript

1. 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)
3. 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 Timeline We encourage discussions throughout the presentation
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 Questions How 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 Total Households
11. The Low-Income Segment Low-income multifamily 5+ households make up almost one-third of low-income households statewide Low-Income Households
12. Low-income Owners of Multifamily Units *AHS data IS LIMITED – Low number of survey responses results should be interpreted with caution **Statistically significant difference p < 0.10 ***Statistically significant difference p < 0.05 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
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
14. The Low-Income Multifamily Segment Proportion of total households Source: U.S. Census Bureau American Community Survey 2011
15. The Low-Income Multifamily Segment Proportion of low-income households Source: U.S. Census Bureau American Community Survey 2011
16. The Low-Income Multifamily Segment Proportion of multifamily households Source: U.S. Census Bureau American Community Survey 2011
17. Comparison of Cadmus and RASS Estimates Cadmus estimates fewer total households but more multifamily households Source: U.S. Census Bureau American Community Survey 2011 and 2009 RASS 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
18. Comparison of Cadmus and Athens Estimates Cadmus estimates 3% fewer low-income households than Athens 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 Source: U.S. Census Bureau American Community Survey 2011 and 2012 Athens Research
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. Surveys with Building Owners and Managers Rent 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 owners Very 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 Size refers to the number of apartment units in CA Weights bring responses of the sample in line with the estimated population
23. Participation in Utility Rebate Programs More than half don’t know Half have not participated 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)
24. 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. Awareness 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
27. Percentage 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 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
30. Survey Findings: Decision MakingRent Assisted & Market Rate Sectors
31. Survey Findings: Decision MakingRent Assisted & Market Rate Sectors
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. Where are the low-income multifamily building opportunities located? Estimated Number of Buildings Housing Low-Income Multifamily Households by Building Size 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? It depends: Opportunities are associated with building vintage Heating and cooling equipment age, weather zone…. Specific market data can help the IOUs develop customized marketing and delivery strategies for their target populations
37. Building Vintage 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 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
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
43. Who is the multifamily customer – the tenant or building owner? 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
44. What is available (services and benefits) to the Multifamily tenants and building owners now
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 Whole Building (e.g. EUC MF) Comprehensive upgrades Investment grade audit Performance-based incentives 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 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
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?
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 Reviewed Research findings Market characteristics/analysis Existing LI/MF efficiency programs in California and elsewhere Resulting recommendations fall under two scenarios: Reaching more income-qualified people 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 Consider adopting customized recruitment/marketing strategies (by IOU) to target measures, buildings, and geographic areas 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
59. Recommendations Reaching More Income-Qualified People 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 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
60. Recommendations Reaching More Income-Qualified People Consider options for expanding current process exceptions to subsidized buildings 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
61. Considerations Consider options for expanding current process exceptions to subsidized buildings 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
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 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 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
64. Recommendations Maximizing Cost-Effective Energy Savings Consider researching building recapitalization cycles to inform marketing strategies that target building owners 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
65. Recommendations Maximizing Cost-Effective Energy Savings Consider adding a comprehensive project path for ESA building owners who wish to implement whole-building upgrades 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
66. Scenario 1 Allow common area measures under the existing ESA Program rules along with shell measures 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
67. Scenario 2 Create a low-income program path for eligible building owners and managers within the existing MFEER and/or MF EUC programs 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
68. Scenario 3 Create a new participation path within the existing ESA Program structure that allows building owners and managers to implement larger building upgrades 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
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 Discussion Comments on Draft Report
73. Timeline 11/15/13 -- Public comments due www.energydataweb.com 12/4/13 -- Post final report Contact Information Mary O'Brian, PG&E: MJOb@pge.com Tory Francisco, CPUC ED: tory.francisco@cpuc.ca.gov Anne West, Cadmus: anne.west@cadmusgroup.com Eric Rambo: eric.rambo@cadmusgroup.com Duane Moran, Research Into Action: Dulane.Moran@researchintoaction.com