Policy and Evaluation

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					DSM – The Obvious Choice
Presentation Overview

•   DSM Overview
•   The Benefits
•   Current Environment
•   The Programs
•   Beyond 2009
What is DSM


   “A utility program aimed at reducing consumer use of
    energy through conservation or efficiency measures.”

  “Energy demand management, also known as Demand
   Side Management (DSM), entails actions that influence
    the quantity or patterns of use of energy consumed by
                       end users.” Wikipedia
DSM and Union Gas

Union Gas has consistently delivered effective Demand
   Side Management (DSM) programs since 1997
Over the past decade there has been approximately a 540
   million m3 reduction in natural gas consumption and
   over $815 million of net savings have been delivered to

                          ….so what is in it for Union Gas?
The Win for Union Gas

The success of Union’s Demand Side Management Programs is driven
   by three primary factors that are tightly linked.

1. Superior customer relationships
2. Employees with strong technical and business knowledge
3. A fair incentive mechanism that focuses the utility on successfully
   delivering these programs

 All of these promote the Union Gas Brand and are a proven formula
   for driving returns for the shareholder and savings for the customer.
DSM Overview

• DSM Department started with 2-3 people over 10 years
  ago and now over 60 FTE are part of the DSM budget
• Currently a 3 year OEB approved DSM plan providing
  certainty on cost recovery and shareholder incentive
  levels (2007-2009)
• Currently preparing a new DSM multi-year plan for
  submission to the OEB which will commence in 2010
• The budget for DSM in 2009 exceeds $20 million
The Benefits
   –   Financial incentive offers significant earnings potential
   –   Revenue neutral for declining gas load
   –   Maintain natural gas competitiveness
   –   Supports our Brand Promise
   – Lower energy and equipment costs
   – Improved competitiveness for their products
   – Reduced need for energy infrastructure
   – Reduced energy usage = reduced greenhouse gas emissions
Current Environment

• Energy prices and environmental issues are top of mind for Ontario
  voters .
• Government investment both federally and provincially in energy
  conservation measures is on the rise and expected to continue.
• The awareness in the market is on the rise and will continue to
  increase; much talk about conservation, energy efficiency programs,
  coupons in the mail and other incentives.
• Consumers want to do the right thing but unsure of all the benefits
  and what to do; very cost conscious.
• Industrial and Commercial customers use energy efficiency
  measures to drive profitability and is a win for the environment.
  Capital cost related to purchasing new equipment is the largest
The programs

• DSM programs are available to all customers and all rate
• The value of a program is measured by the Total
  Resource Cost (TRC)
       TRC = Net Present Value of (Benefits – Costs)
  where the
             Benefits = net avoided energy costs
        Costs = utility program costs + net participant
The DSM Programs

Residential & Low Income Market

   – Programs target the reduction of natural gas
     consumption for space-heating and water-heating in
     residential homes
   – OEB participants are most passionate about
     programs in this market
   – Includes low income program mandated by the OEB
   – Largest market to influence brand awareness
Saving Energy at Home –
Residential DSM

1. Energy Saving Kits
2. Energy Star For New Homes
3. Drain Water Heat Recovery
4. HVAC Partnership Program
The DSM Programs

Commercial & Industrial

   – Targets end-users, consulting engineers, HVAC
     partners, design build trade allies
   – Both custom and prescriptive programming in the new
     build and retrofit market
   – Approach the market through segmentation creating
     bundled packages that add value
   – Through strong customer relationships we are also
     able to leverage growth opportunities
Saving Energy at work -
Commercial DSM

 • Water
    – Showerheads and kitchen aerators
    – Commercial Kitchen – Pre-rinse Spray

 • Gas
    – Boilers
    – Air Handlers
    – Kitchen Ventilation
    – Programmable Thermostats

 • Electricity
     – Lights, motors, fans
The DSM Programs

Strategic Accounts

   – Custom programs that target customer equipment installations
     and process changes that improve productivity by decreasing
     their energy use per unit of production
   – Projects are managed from initial opportunity, assessment and
     engineering feasibility to capital requisition and installation to
   – Projects can be long term initiatives that require specific
     technical expertise and generally take 1-5 years to complete.
   – Strong customer relationships enable Union to influence energy
     efficiency decisions
Beyond 2009

• Secure a multi-year agreement
• Seeking a DSM plan that provides similar structure and
  recovery of costs that we have today.
• OEB has issued generic guidelines all filings should
  follow for the “next generation” DSM