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DSM – The Obvious Choice

DSM – The Obvious Choice

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DSM – The Obvious Choice

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  1. DSM – The Obvious Choice

  2. Presentation Overview • DSM Overview • The Benefits • Current Environment • The Programs • Beyond 2009

  3. What is DSM Definitions: “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

  4. 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 customers….. ….so what is in it for Union Gas?

  5. The Win for Union Gas The success of Union’s Demand Side Management Programs is driven by three primary factors that are tightly linked. • Superior customer relationships • Employees with strong technical and business knowledge • 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.

  6. 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

  7. The Benefits • UNION GAS • Financial incentive offers significant earnings potential • Revenue neutral for declining gas load • Maintain natural gas competitiveness • Supports our Brand Promise • CUSTOMERS • Lower energy and equipment costs • Improved competitiveness for their products • SOCIETY • Reduced need for energy infrastructure • Reduced energy usage = reduced greenhouse gas emissions

  8. 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 barrier.

  9. The programs • DSM programs are available to all customers and all rate classes • 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 costs

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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 commissioning • 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

  15. 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