# 2012 Annual Report

of the
Efficiency Maine Trust

November 30 , 2012
(Revised February 12, 2013)

## Table of Contents

Page

Executive Summary

.................................... ....................................................................................... .... 1

Introduction

.............................................................................. . ................................................ ... ...... .... 

### 3

Programs

.................. ................................. .......................................................................................... .... 6

Business

..................................................................................................................... .... 8

Residential

.................................................................................................................. . 22

Alternative Energy

................................................................................................... ... 37

Cross

- Cutting

............................................................................................................ ... 40

Administration and Finance

........................... ................................................................................. ... 46

Other Initiatives

.............................................................................................................................. .... . 51

Appendi ces
....................................................................................................................................... ... . 551



# Executive Summary

This is the Annual Report of the Efficiency Maine Trust for Fiscal Year 2012 (FY12 ) . The period covered is July 1, 2011 to June 30, 2012

.
As described in this report, the Trust managed funds to administer programs promoting energy efficiency and customer

- owned alternative energy. As in previous years, a significant portion of the Trust’s funds derived from Maine’s electricity customers , thr ough the S ystem B enefit C harge (SBC) and the Regional Greenhouse Gas Initiative (RGGI)

, and was deployed to help lower electric ity costs. In the aggregate, these electric programs will help customers to avoid the consumption of 1.8 billion kWh of
electric consumption and lower present and future electric costs in Maine by more than $ 128 million.
Table ES

- 1 summarizes the results of the Trust ’s electric efficiency programs :

Table ES

- 1

– FY1 2 Benefits and Costs of Efficiency Maine Electric Programs

Another portion of the funds that the Trust used in FY12 came from grants from the federal American Recovery and Reinvestment Act (ARRA). These funds were primarily used to achieve energy savings regardless of fuel type, for “all fuels.” All

- fuels progra ms leveraged $11.5 million in private investments in Maine’s energy infrastructure and are projected to lower Mainers’ present and future energy costs by more than $14.6 million. Table ES

- 2 summarizes the results of the Trust’s “all fuels” energy efficien cy and alternative energy programs.2 Table ES

- 2

– FY1 2 Benefits and Costs of Efficiency Maine All

- Fuels Programs Funded by the American Recovery and Reinvestment Act (ARRA)

As discussed in the F inancial section of this report, the Trust paid out $ 38 mill ion in FY12 to fund the programs described above. Table ES

- 3 provides a summary of the Trust’s payments during the year.



### Table ES

- 3

– FY1 2 Payments Made

Use of Funds Amount ($)

Administration 3,428,155 Residential Programs 10,822,940
· Low Income 915,772
· Non

- Low Income 9,907,168 Business Programs 20,048,061
Cross

- Cutting Strategies 2,903,776 · Financing and Training 4,261 · Codes and Standards 81,484 · Education and Awareness 822,415 · Evaluation 1,128,922 · Alternative Energy Program 729,858
· Innovation 136,836 Interagency Grants 830,491

Total Expenditures 38,033,423 1



### A recommendation for legislative review and amendment is provided at the end of the report.

1 Expenditures in this table reflect all payments made by the Trust during FY12. This includes payments made for projects that were awarded in FY11 but not completed and paid until FY12, as commonly occurs on the larger projects funded through the Large Customer Program and the Commercial Grant Program. The Trust reports the energy savings, costs, and cost

- effectiveness of its programs in the fiscal year in which the projects were awarded, which explains the d iscrepancy between the Total Expenditures in this table and the Efficiency Maine Costs reported in Tables ES

- 1 and ES

- 2 and in Appendices A and B.3 

# Introduction

This is the Annual Report of the Efficiency Maine Trust (the “Trust” or “Efficiency Maine”) for activities during fiscal year 2012 (FY12), which covered the period from July 1, 2011 to June 30, 2012. It describes the budgets, activities and results for al l programs and related activities administered by the Trust during FY12.

The Trust

The Efficiency Maine Trust was created by state statute in 2009. T he purposes of the Trust include:

consolidating under one roof the funds for Maine’s consumer efficiency programs for all fuel
types

– electric, natural gas, and heating oil

– together with consumer alternative energy

programs;

integrating delivery of electric and thermal efficiency measu res so the customer can have a one

stop shopping experience;

acquiring energy resources (efficiency and alternative energy) that cost less than traditional energy supply to help individuals and businesses meet their energy needs at the lowest cost; and,

h elping to transform the energy market in Maine so that energy efficient products, alternative energy equipment, and related energy services are more accessible and affordable to end

- use
customers.

The statute that established the Trust gave the Board spec ific duties. Chief among these is a fiduciary duty to hold the funds in trust for the benefit of the electric and natural gas utility customers where
funds are derived from those customers. 2

During FY12, Trustees Tom Tietenberg and Michelle Atherton completed their terms and new Trustees Doug Smith , retired, and Al Hodsdon of A.E. Hodsdon Engineers were appointed to the Board. Other Trustees during FY12 were: James Atwell of Sevee and Mahar Engineers , Kenneth Fletcher of the Governor’s Energy Office, Adam Lee of Lee Auto Malls, Dale McCormick of MaineHousing, Naomi Mermin of Naomi Mermin Consulting, Glenn Poole of Vers o Paper, and John Rohman of WBRC
Architects and Engineers

.
The Board is responsible for developing a three

- year strategic plan, called the “Triennial Plan.”

2 35

- A MRSA § 10110(10). See also

, § 10111(2)(Natural Gas) and § 10109(2)(A)(Regional Greenhouse Gas Initiati ve) of the same statute

.4

The Triennial Plan

The function of the Triennial Plan is to identify program initiatives, allocate budgets, and establish metrics by which to judge program effectiveness and efficiency. The Plan guides the use of various

revenue st reams that come into the Trust such as:

Electric Efficiency and Conservation Fund;

Regional Greenhouse Gas Initiative (RGGI) Trust Fund;

Natural Gas Conservation Fund;

Heating Fuels Efficiency and Weatherization Fund; and,

“Any state or federal funds or publicly directed funds accepted by or allocated to the trust ...” 3

At the end of a public process to gather stakeholder input, the Trust’s Board developed the First Triennial Plan as an actionable plan to put Maine on the path to achieving a broad range of energy saving targets and “best practices” of efficiency program administration. The Triennial Plan covers Fiscal Years 2011, 2012, and 2013, which spans the period from July 1, 2010 through June 30, 2013. As such, the FY12 program activities reported in this Annual Report were guided by the First Triennial Plan.

Annually, the Trust has an opportunity to inform the Public Utilities Commission of any significant mid

course changes that should be made to the Triennial Plan. The Trust has filed two Annua l Update Plans that impacted activities in FY12, the first filed in January of 2011 that affected the first half of FY12, and the second filed in January 2012 impacting the second half of FY12. In both cases, the updates reflect ed adjustments to revenue s (including the receipt of three federal grants, the discontinuation of the Solar and Wind Rebate System Benefit Charge, the decision by policymakers not to authorize incremental new funding for electric, natural gas or oil saving programs, and projections of reduced proceeds from the auction of RGGI allowances) and the resulting alterations to program budgets, activities and performance metrics. Of particular note, during FY12 the Commission was asked for and gave its approval for a shift in the strategy for the program that serves low income electricity customers whereby the Trust focus ed on weatherizing electrically heated low

- income homes

. This shift was made in part in response to policymakers’ concerns about the increasing heating burden on low income
Mainers.

In sum, in its second full year of operation the Trust began to settle in to its role with improved efficiency of administration and increasingly robust procedures and practices. The Trust developed and incorporated a significantl y enhanced database to track the energy projects funded through its programs; improved its grant oversight procedures; and, established a new management system to safeguard confidential customer information.

3 35

- A MRSA § 10104(4)

.5

The overall expenditures and program strategie s of the Trust were similar in FY12 to what was spent in FY11, and the resulting energy and cost savings are similarly strong. One manifestation of this is that
ISO

- New England has determined that Efficiency Maine Trust has the lowest costs of production to save a unit of electricity compared to all other programs in New England.

Through the course of FY12, the Trust exhausted most of the grant funds allocated to it through the federal Recovery Act (ARRA). It sharpened its focus on higher performing prog rams while scaling back those that underperformed.

In addition to managing its core energy efficiency and renewable energy programs, the Trust also participated in or initiated energy policy discussions at the Legislature and the Public Utilities
Commiss ion. Topics of these discussions included: development of the Non

- Transmission Alternative pilot project; development of a pilot project for mini

- split heat pump supplemental heating systems; procuring energy efficiency as a resource, competitive with othe r electricity resources, through a power purchase agreement; and , developing the next three

- year, strategic plan to guide the Trust’ s programs.

The Triennial Plan, as updated to reflect significant changes, proposed to implement programs organized
in three basic categories: (1) programs for business customers; (2) programs for residential customers; (3) cross

- cutting programs. As presented in the sections and appendices that follow, this Annual Report provides detail on the budgets, strategies and results for each of those three categories of activity during fiscal year 2012 (FY12).6 

# Programs

In FY 2012 , the Efficiency Maine Trust delivered a second straight year of effective programs to reduce Mainer’s energy costs and increase their energy independence. The economic impact of the FY12 programs included :

lowering present and future energy costs in Maine by an estimated $ 142.5 million, making
business es more profitable and co mpetitive and families more economically secure;

reducing demand for electricity across the state enough to suppress the price paid by all Mainers on the grid for energy, capacity, carbon allowances, and renewable energy credits; 4

generating more than $ 7 3.25 million in total investments in energy infrastructure upgrades during a sluggish economy; and,

helping to create or retain jobs (a recent macroeconomic study estimated that every $1 million in electric efficiency program funding tends to generate 51 full

- time equivalent jobs for a year and that every $1 million in oil efficiency program funding tends to ge nerate 75 full

- time equivalent jobs for a year).

The summary tables below illustrate the total energy savings and lifetime avoided energy costs from each of the programs administered by Efficiency Maine i n FY12

. Each table also shows the costs of
Efficie ncy Maine to provide education, training, technical support, financial incentives, quality control, measurement and verification, and evaluation of each program, as well as the customer (“participant”)

cost

- share to install energy upgrades. The Benefit

- to

- Cost Ratio indicates the ratio of the benefits (from the lifetime avoided energy costs) to the combined costs of Efficiency Maine and the participant.

4 See, Synapse Energy Economics, Inc., “Avoided Energy Supply Costs in New England

– 2011 Report,” (2011 ), Appendix B, p. B

- 21.7

Table 1

– FY12 Costs and Savings for Programs Funded by the Electric and Natural Gas System Benefit

Charges (SBC) and by the Regional Greenhouse Gas Initiative (RGGI)

Table 2

– FY1 2 Costs and Savings for Programs Funded by American Recovery and Reinvestment Act ( ARRA) Funds

This section of the Annual Report provides a short description of each of the programs referenced in these two tables. The descriptions are divided into four categories:

Business Programs; Residential Programs; Alternative Energy Programs; and

Cross

- cutting Strategies.

Each description generally includes a statement of the main purpose of the program, an indication of activities undertaken to implement the program, and a summary of any quantifiable results.8 

# BUSINESS PROGRAMS

Through its Business Programs, Efficiency Maine administers a wide variety of offer ings for business and
institutional customers of all sizes

. This class of customers includes “mom and pop” small businesses, municipal and state governments, non

- profits such as hospitals or YMCAs, schools and universities, commercial offices and warehouses, and large industrial manufacturers.

This section of the Annual Report describes the Bus iness Programs delivered in FY12

, organized by the source of the funds used to pay for the programs. The first group of Business Programs described below

w as paid out of funds generated by the electric and natural gas s ystem b enefit c harge s (SBC) or Regional Greenhouse Gas Initiative (RGG I). These are programs that Efficiency Maine has offered for much of the past decade and will continue to offer into the future. The second group of Business Programs was paid out of funds received from the federal government, primarily through the Ameri can Recovery and
Reinvestment Act (ARRA). Because the ARRA funds were a one

- time source of revenue, continuation of
the ARRA

- funded programs is not assured unless new revenues are authorized or resources are shifted from other programs.



## BUSINESS INCENTIV E PROGRAM

Overview : The Business Incentive Program provide s education, technical assistance , quality control and
financial incentives for energy upgrades to businesses of all sizes . The financial incentives are delivered to these business customers through either the Prescriptive p ath or the Custom p ath . The purpose of Efficiency Maine’s Prescriptive p ath is to provide financial incentives for a portion of the incremental
cost of e fficient electric equipment relative to standard equipment. ( In the natural gas utility territory served by Unitil, this program also offers financial incentives for a portion of the incremental cost of efficient natural gas equipment. The activities and results of the natural gas program for commercial customers is reported in a separate section.)

FY12 Activities: Prescriptive incentives are offered at fixed amounts for a prescribed list of the most

common efficient electric equipment that can be used in nearly every business: lighting, lighting controls, refrigeration, HVAC units, variable speed drives, and equipment related to agricultural industry. Efficiency Maine’s Custom path also provides incentives as well as technical assistance for the purchas e and installation of premium

- efficiency electrical equipment that is not on the prescribed list of the Prescriptive Program . The Custom path supports higher efficiency equipment installations used on new construction projects, renovation projects, or for the early replacement of functioning, but less efficient, existing equipment.9

Activities undertaken for the Business Incentive Program this year include:

Conducted 3 Qualified Partner training sessions, recruiting and training 128 new Qualified Partners; Answered approximately 1800 incoming calls for customer support; Participated in 8 targeted business trade shows; Presented Business Program overview and Energy Management practices at 25 business and trade association meetings throughout the State.

To bu ild up the capacity of the supply chain to help deliver program offerings to business customers , the
Trust continued to expand and enhance the Qualified Partners network in FY12 . Qualified Partners are experienced vendors, contractors, suppliers and other professionals who supply

, install or advise
customers about energy

- efficient equipment. These Qualified Partners are familiar with the Business Programs and assist customers with the selection of qualifying equipment and to apply for cash
incentives for their energy

- efficiency project. There are more than 410 Qualified Partners who have successfully completed all requirements and are participating in the Business Program.

For projects conducted in FY12, the Trust recognized the following Qualified Partne rs for their excellence in supporting the delivery of Efficiency Maine’s programs for business customers:

QP of the Year : Energy Management Consultants (EMC)

Supplier of the Year : CED Gilman Electrical Supply

Contractor of the Year : Mechanical Services, Inc.

Largest Lighting Project of the Year : Ameresco

Largest Mechanical Project of the Year : Woodard and Curran

FY12 Results: T he Business Incentive Program had an initial energy savings goal of saving 35, 5 00 megawatt

- hours ( MWh ) per year. However, FY12 program results exceed the initial goal and are projected to save 44,632 M W h per year . Summary information about the program participation, costs and benefits appear in Table 3

.

Table 3

– Business Incentive Program Results
Total Participants Total Projects Lifetime kWh Savings Efficiency

Maine Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

- Cost

Ratio 1608 2510 592,752,866 $9, 355
, 717 $25,874,806 $44,208,732 1.2 5

Table 4 indicates the breakdown of the measures installed through the Business Incentive Program and the share of each that were funded through the Prescriptive or the Custom incentive structure.10 Table 4

– Business Incentive Program Measures Installed



### Project Type # of Projects # of Participants

Prescriptive Lighting 2,158 1,332 Prescriptive HVAC 88 75 Prescriptive VFD 44 37 Prescriptive Agriculture 18 17 Prescriptive Refrigeration 52 34 Prescriptive TPM 3 2 Custom Lighting 64 43
Custom HVAC 14 11 Custom Compressed Air 24 21
Custom VFD 24 19
Custom Misc ellaneous 21 17 

### Total 2,510 1,608

Program Evaluation

Efficiency Maine contracted with Opinion Dynamics Corporation to conduct an impact and process evaluation of the Business Incentive Program. The study, completed in November 2011, evaluated electric energy and demand savings, analyzed program cost

- effectiveness, and examined program design and delivery. Research methods include d: on

- site measurement and verification of project
installations

, telephone surveys of participants and non

- participants, in

- depth interviews with program staff and qualified partners, analysis of program database and savings calculations, and engineering reviews of projects

. The key finds of the evaluation were:

Participants and Qualified Partners report being generally satisfied with the program. In FY2011, the manufacturing sector was a key driver of savings, the share of savings from prescriptive light ing decreased from previous years, while the share of custom projects increased. The average size of projects has fallen sharply since FY 2007. The program made continuous adjustments and improvements between 2007 and 2011, including improved electronic a pplication and program tracking system, and the introduction of the Qualified Partner network. The introduction of the Qualified Partner status for trade allies was successful in focusing the list of program partners and increasing the quality of submitted applications. Realization rates were estimated to be 1.01 (101%) for energy savings and 1.03 (103%) for demand savings, meaning that verified savings from the evaluation are almost identical to program reported savings. This was true for the program overa ll and for both prescriptive and
custom components.11

The net

- to

- gross ratio (NTG R )

, 5 which represents the estimated fraction of gross program savings 6 that can be directly attributed to the program, was estimated to be 0.66 for the program overall, 0.70 fo r the prescriptive component and 0.62 for the custom component. Applying the realization rates and NTG R for FY2011 program res ults, the evaluation estimated:

o Verified gross energy savings of 44 MWh and verified net energy savings 29 MWh ; and,

o Verified gro ss demand savings of 8.4 MW and verified net demand savings of 5.6 MW

. The Total Resource Cost (TRC) benefit

- cost ratio for FY2011 was estimated to be 1.93 based on net savings and costs. This compares to a program reported value of 2.21. The difference ma inly stems from the application of the net

- to

- gross ratio.

FY13 Plans : Roll out the new Prescriptive path’s Compressed Air incentives for compressors and ancillary air system equipment ; Move to a paperless application process ; Continue to enhance the field support to the Qualified Partner network ; and Update the Commercial Technical Reference Manual

.



## LARGE CUSTOMER PROGRAM ( ELECTRICAL SAVINGS )

Overview : In FY1 2 , Efficiency Maine’s Large Customer Program provided grants for large

- scale kilo w att

hours ( kWh ) saving projects. The focus of the program is to leverage private investment to achieve significant electrical savings and to stimulate economic growth in Maine. (In the prior two years, this program also funded projects large customer pro jects aimed at reducing greenhouse gas emissions, which projects were principally focused on energy upgrades that reduced the use of #2 distillate fuel or

5 NTGR is the ratio of net savings to gross savings. The NTGR may be determined from the free

- ridership (FR) and spillover (SO) rates (NTGR=1

- FR+SO), if available, or it may be a distinct value relating gross savings to the net effect of the program with no separate specification of FR and SO values

. A program’s FR rate is the percentage of program participants deemed to be free riders. A free rider refers to a customer who received an incentive through an energy efficiency program who would have installed t he same or a smaller quantity of the same high efficiency measure on their own within one year if the program had not been offered. Spillover refers to energy

efficient equipment installed in any facility in the program service area due to program influen ces, but without any financial or technical assistance from the Program. It is expressed as a percent or fraction of the gross savings attributable to program participation.
6 Gross Savings is t he change in energy consumption and/or demand that results dir ectly from program

- related actions taken by participants in an efficiency program, regardless of why they participated and unadjusted by any factors. Adjusted Gross Savings is t he change in energy consumption and/or demand that results directly from
progra m

- related actions taken by participants in an efficiency program, regardless of why they participated. It adjusts for such factors as data errors, installation and persistence rates, and hours of use, but does not adjust for free ridership or spillover.12

residual fuel. These greenhouse gas projects were funded by federal Recovery Act (ARRA) funds that d id not carry the same restrictions as the Trust’s funds derived from the electric SBC or from RGGI.)

These grants were targeted at many of the biggest energy consumers in the state. They were selected based on the quantity of electric energy, measured in kWh, saved per program dollar invested by Efficiency Maine. By and large these companies and institutions have limited capita l budgets with many competing needs. As a result

, the p ayback requirements for capital projects are short . This reality

creates a significant market barrier to approval and installation of large energy efficiency projects

. The
grants from this p rogram help ed buy

- down the up

- front capital cost of large energy upgrade projects, helping the projects meet corporate Return on Investmen t requirements and gain approval. This ma de the projects possible, free d up operating budgets and returned cash to the businesses during a difficult

economy.

FY1 2 Activities:

The main activities undertaken during FY12 were:

Marketing and explaining the competitive bid opportunities to large customers;

Screening bids and presenting the recommendations of a technical team to the independent review committee to select winning bidders;

Negotiating contracts with winning bidders;

Monitoring project progress for this round and the previous round (from FY11) of competitive ly bid large projects.

The Large Customer Program used funding from the RGGI auction proceeds and from the settlement of the Maine Power Reliability Project

. These grants were awarded primarily on the basis of annual
kilowatt

- hour per dollar of grant funds, while project readiness, and comprehensiveness. The grants
awarded in FY12 ranged from $ 1 00,000 to $ 50 0,000 per project.

The Trust released two rounds of funding. T h e first round was conducted in September of 201 1 through
which eight grants were awarded totaling $ 2

. 8 million and $ 5 .01 million in private matching funds was leveraged

. The second round was released in February and awarded six grants in May though which $ 1.4 million leveraged $ 3.6 million in private investment. The types of projects funded through the Large
Customer Program include cost

- effective renewable generation, innovative process enhancements, and efficient drives and pumps. Projects funded during this fiscal year to date are collectively projected to reduce electricity consumption by 4 6

. 8 million kWh over the full life of the installed measures.13

FY1 2 Results: Highlights of the results from the Large Customer Program activity include:

Table 5

– Large Customer Program (kWh) Results
Total Participants Total Projects Lifetime k Wh Savings Efficiency

Maine Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

- Cost

Ratio
13 13 467,859,118 $4, 578
, 526 $8,632,639 $32,001,587 2.42

Program Evaluation

Efficiency Maine contracted with Navigant Consulting , Inc. and subcontractor Turner Building Science to conduct an impact e valuation of the Large Project Grants P rogram (now known as the Large Customer Program) . The study , completed in April 2012

, evaluated the energy savings achieved by the Large Project Grants for projects that saved electricity and/or greenhouse gases . The evaluation covers the 26 grant projects completed through January 31, 2012. Research methods included on

- site m easurement and verification, engineering review, and telephone surveys.

The key findings and recommendations of the evaluation were:

Realization rates (evaluation verified savings / program reported savings) were estimated to be :

o 1.20 for Greenhouse Gas Reductions

o 1.19 for Annual Electricity Savings

o 0.89 for ISO

- NE Summer Peak Demand Savings

. The net

- to

- gross (NTG) ratio , or estimated fraction of savings that can be directly attributed to the program , was :

o 0.67 for Site Energy Savings (all fuels in MMBT u units)

o 0.78 for Electricity Savings

o 0.65 for Fossil Fuel Savings
The Total Resourc e Cost (TRC) benefit

- cost ratio was :

o 8.0 based on gross savings and costs

o 7.8 based on net savings and costs.

The evaluation recommended that the Trust:

C ontinue funding for this program, incorporating both electricity and GHG focused projects
because it generated a very strong TRC result in addition to having high energy saving impacts

, and p articipants were anecdotally pleased with the program.

Continue performing significant technical review, similar to the Business Incentive Program review of custom projects. The Trust should perform a technical review, specifically focused on the project definition, assumed baseline, and fuel savings type. This should include a follow

- up call to discuss technica l aspects of the project with the applicant. The existing review system is working well and is preventing major errors in projections of savings from occurring.14

Continue marketing this program to private industrial sites, especially paper mills. These sites have significant capital constraints, which have prevented many investments in energy efficiency from occurring. This means that there are more likely to be co st

- effective projects available that generate la rge benefits relative to costs.

FY1 3 Plans : The Trust will offer additional rounds of funding in 2013 using much the same standards as
in 2013. The Trust may also use a portion of the Better Buildings revolving loan fund to make additional funding available should it be successful in securing additional payments for the output of the projects through a long

- term contract

.



## MAINE HIGH PERFORMANCE SCHOOLS

Purp ose: The Maine High Performance Schools (HPS) program was designed to incent energy efficiency design improvements in the lighting and mechanical systems in the construction of Maine schools. HPS was launched in 2005 as a result of a partnership of the M aine Department of Education, Bureau of General Services, the Maine School Management Association, United States Department of Energy, and Efficiency Maine.

FY1 2 Activities: The HPS program is now managed under Efficiency Maine’s C ommercial N ew C onstruc tion P rogram. The HPS program is not an active program in the sense that all available funding was committed prior to FY12, Efficiency Maine has added no new funds to it and has discontinued promotion of new entrants. However, several schools are still c ompleting pre

- existing agreements from the original program, and for this reason funds are still reserved in the budget and payments continue to be made to meet those prior commitments.

Nine schools remain in the HPS queue as they complete the design

, con struction and commissioning

process

.

FY1 2 Results: Two schools completed the design/constructi on/inspection process in FY 2012

. The schools completing their agreements in FY1 2 were: Norridgewock Elementary and Brunswick Elementary

.15 Table 6

– High Performance Schools Results

Total Participants Total Projects Lifetime k Wh Savings Efficiency

Maine Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

- Cost

Ratio 2 2 3,349,500 $ 2 21
, 937 $ 167,668 $ 261,777 0.6 7

FY1 3 Plans : The program activities planned for FY13 are the same as in FY12. It should be noted that this program is not accepting new project proposals and is only overseeing and paying for the completion of prior commitments. The budget for the program in FY13 appears in Appe ndix C.



## BUSINESS NATURAL GAS INCENTIVE PROGRAM

Overview : Launched in November 2011, the Business Natural Gas Incentive P rogram provides

c ommercial and i ndustrial (C& I) customers access to technical assistance and financial incentives for the installation of “top tier” energy efficient equipment. The program provides prescriptive incentives for customers of Unitil, 7 and focuses on premium efficiency boilers, furnaces and heaters, and their associated controls, as well as efficient gas

- fired commercial kitchen equipment.

The t arget m arket includes all non

- residential customers including commercial, industrial, municipal,

non

- profit, and institutional customers located i n the Unitil Natural Gas service territory. There are approximately 8,000 non

- residential natural gas accounts in Unitil’s service territory.

This program experienced a brief delay in implementation in FY12 as the Staff and its technical advisors
reviewed recent results in other states. Independent evaluations of certain natural gas efficiency programs in nearby states showed that the approach that Efficiency Maine was intending to follow was returning disappointing results in those states. Rather than r isk that same result, Efficiency Maine made adjustments that included piggybacking the marketing, training and incentive processing onto the existing Business Incentive Program (that had been targeting exclusively electric savings opportunities). Also, th e list of eligible efficient natural equipment was reviewed and tightened.

FY12 Results: As a small, new program, the Business Natural Gas Incentive Program experienced a modest uptake in participation. Summary information about the program participati on, costs and benefits appear in Table 7

.

7 Current state law establishes a minimum threshold of customers that triggers whether a natural gas utility must contribute funds to the Trust’s Natural Gas Conservation Fund and whether that utility’s customers are eligible to receive assistance from Eff iciency Maine programs. Only Unitil has reached this threshold.16 Table 7

– Business Natural Gas Incentive Program Results
Total Participants Total Projects Lifetime
MMBTU Savings Efficiency Maine

Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

Cost Ratio

14 14 36,890 $ 110,952 $ (7,641) $ 252,693 2.45

Other program activities performed in FY12 include :

Enhanced the website to provide additional information for program participants and equipment vendors ; Attended trade shows to highlight the program and highlight qualifying natural gas equipment; Developed a focused Qualified Partner training module to include specifics on natural gas equipment and program application guidelines.

FY13 Plans : The program budget in FY13 appears in Appendix C

. Unspent funds from the slow start in FY12 will be rolled over into the FY13 budget for this program. Given the relatively small size of this program, it is projected that the program will be fully subscribed by the end of the fiscal year.



## SMALL BUSINESS LOAN PROGRAM

Overview : For several years, Efficiency Maine has provided loans of up to $35,000, at 1% interest for up to 5 years
, to help small businesses finance approved energy conservation measures such as : electrical equipment including lig hting, machinery, HVAC and refrigeration; heating equipment, regardless of fuel type; and insulation

. An energy audit identifying recommend ed energy efficiency measures has been required.

FY12 Activities : As in prior years, in FY12, Efficiency Maine continued its arrangement with the Finance Authority of Maine (FAME) to perform underwriting of loan applications. The program is described on the Efficiency Maine website on the pages frequented by small business customers; it is explained in Qualified P artner trainings so that they can convey the opportunity to suitable customers; and it is referenced during presentations to business audiences such as regional chambers of commerce.

FY1 2 Results: In recent years there has been very low demand for this pro gram. The summary results of the Small Business Loan Program are provided in Table 8

.17 Table 8

– Small Business Loan Program Results

Total Participants Loan

Value Annual Energy Savings

(MMBTUs) Efficiency Maine Costs Participant

Costs Benefit

- to

- Cost

Rati o 12 $355,076 796 $11,608 $355,076 N/A

FY13 Plans : The Small Business Loan Program has fully expended its budget . As of FY13, Efficiency Maine is not offering new loans through this program, but instead is shifting focus to the Small Business Direct Install Program and its on

- bill financing option. As loan payments build up to a level that is sufficient to support new loans, the loan pool will again be available.



## COMMERCIAL NEW CON S TRUCTION PROGRAM

– MAINE ADVANCED BUILDINGS

Overview : Efficiency Maine’s program for new construction of commercial buildings

, usually referred to
as “ Maine Advanced Buildings, ” (MAB) provides easy

- to

- follow guidelines and incentives to design buildings that are 15

- 20% more energy

- efficient than the Maine Uniform Building and Energy Code requires.

The g uidelines help achieve savings on both electric and fossil fuel usage, without the expense and complexity of sophisticated computer

- based modeling. The guidelines promote the use of cost

effective, off

- the

- shelf building technologies, which have been proven to reduce energy usage and improve building performance.

To be eligible for program participation the project must involve a new building or the substantial renovation of a commercial, institutional, or industrial building, or the expansion of an existing building. Major renovations usually consist of significant rework to the in terior layout and finishes, changes to the exterior envelope, and/or the replacement of mechanical and electrical systems.

FY 12 Activities:

Key activities included:

Two presentations conducted for architects and engineers promoting the program, each
pres entation eligible for continuing education credit;

Supporting the participation of five new design firms in the program ;18

Providing on

- site monitoring and technical support for all projects in the program

.

FY12 Results: P rogram activity included :

The completion of f ive projects representing over 113, 000 sq.ft . of new construction meeting
MAB standards ;

Eleven projects began construction , of which nine projects are scheduled for completion in FY13
and two projects are scheduled for completion in FY14.

As summarized in table below, the Benefit

- to

- Cost ratio is slightly below 1, indicating that the combined costs of Efficiency Maine and the Participant were not greater than the total energy benefit of the project. This result warrants some discussion. F irst, it is arrived at using the Total Resource Cost test. Having a score of less than 1 will typically result in either discontinuing the program or revising and watching it closely to see if it can be improved. When looked at from Efficiency Maine’s pe rspective alone, it appears that this program is not a bad investment of resources. With Efficiency Maine costs below $200,000, the program leveraged more than $1.4 million in customer investment toward efficient upgrades. Second, this is a new program. As such, it may have experienced higher than normal start

- up costs. Third, new construction projects tend to have a much longer lead time than most other projects, and FY12 occurred during a period of extremely slow economic growth. This might explain w hy Efficiency Maine’s efforts led to only five projects that came to fruition during the program year. It is likely that some of the upfront investment during this year will lead to projects that transpire in subsequent years.

Table 9

– Commercial New Con struction Program Results

Total Participants Total Projects Lifetime Energy Savings (MMBTU) Efficiency

Maine Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

- Cost

Ratio

5 5 3,470 $199,754 $1,425,720 $1,473,794 0.91

FY1 3 Plans : In FY13, ARRA funds committed to this program will be totally allocated to projects completing in calendar year 201 2 . A limited amount of other funding was allocated to finish the remaining projects. Because other revenue funding sources for this program in FY13 are limited, no new applications for the MAB financial incentive will be accept ed . The program will transition to promotion of best practices and offering technical advice or training . The budget for the remaining program participants for FY13 ap pears in Appendix C

.19



## RETRO

- COMMISSI ON ING PILOT PROGRAM

Overview : This ARRA funded pilot program was launched in April 2010 to determine whether measurable energy savings could be achieved by offering building owners the opportunity to improve the efficiency of their building operations through a “tune

- up” of their existing building energy systems.

Through this program , Efficiency Maine offered participants a cost share of up to 50% for e ngineering studies to determine if systems were working properly. When savings opportunities were identified, the participant and Efficiency Maine shared the cost of adjusting the energy management system and resulting energy savings were measured

.

The o verall objectives of the pilot program include the following

Demonstrate the validity of re tro

- commissioning as a viable energy saving measure by implementing re

- commissioning at 35 buildings;

Improve the ability of building operations staff to identify wa steful energy use;

Ensure savings created persist over the expected lifetime ;

Ensure quality control to the building owner from a well

- delivered re tro

- commissioning process ;

Provide insight to aid in developing a full

- scale re tro

- commissioning program.

FY 12 Activities: The main activit ies of the program were:

Served as liaison between the building owner and the RCx agent to ensure project met expectations;

Provided technical support to the RCx agents;

Conducted outreach effort s to recruit program partici pation

.

FY12 Results: This ARRA Funded program has continued throughout FY12 with new projects underway as the year ended. Progress at the end of FY12 is reflected in Table 10.20 Table 10

– Retro

- Commissioning Program Results

Total Participants Total Pr ojects Lifetime Energy Savings MMBTU Efficiency

Maine Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

- Cost

Ratio

31 35 54,826 $ 354,052 $ 593,691 $ 996,641 1

. 05

FY1 3 Plans : Budgeted ARRA funds for this program in FY13 will be fully exhausted half way through the fiscal year . There are no new funds for this program and no new project proposals will be accepted beyond the second quarter of FY13. Once the last proposals are accepted, Efficiency Maine’s activities will be limited to monitoring a nd oversight and reporting on the projects.

Program Evaluation

Efficiency Maine has contracted with The Cadmus Group to conduct an impact and process evaluation of
the Retro

- Commissioning Pilot Program. The evaluation, to be completed by December 31, 201 2,
includes s takeholders interviews (with Trust staff, retro

- co m missioning providers, and program implementers ) , participant surveys, project file reviews, and on

- site project audits. The evaluation will:

e stimate e nergy and demand savings achieved; i dentify additional opportunities to save energy; a ssess measure lifetime and persistence; d evelop an understanding of the program’s operation an d how it could be improved; and, develop recommendations for continuation of the program should funding
become a vailable.



## SMALL BUSINESS ENERGY AUDIT PROGRAM

Overview : Efficiency Maine’s Small Business Energy Audit program offers Maine’s small businesses the chance to evaluate their energy

- efficiency opportunities. High up

- front costs, limitations on time and knowledge, and limited access to capital are particularly difficult barriers for small business customers. The objectives of an energy audit are to identify and develop modifications that will reduce the energy use and/or cost of operating a building. E nergy audits should provide the owner/operator with
suffici ent information to determine the best opportunities to reduce the build ing’s energy use and/or cost and a general sense of how the savings will compare to the cost.

In FY12, t he Efficiency Maine Small Business Energy Audit Program , funded with federal Recovery Act dollars, was open to commercial, non

- profit and manufacturing facilities located in Maine that met energy use and facility type criteria and met the following requirements:

Less than 50 employee s21

Annual revenue less than $5 million

Building size larger than 1000 sq. ft.

In FY12, the Audit Program offered participa n ts a no cost basic walk

- thru energy analysis . These written report contained recommendations for potential energy savings along with information on financial

o ptions available to help the businesses proceed with the suggested energy efficiency measures.

FY1 2 Results: The summary results of the Small Business Energy Audit Program in FY12 appear in Table
11.

Table 11

– Small Business Energy Audit Program Results

Total Participants Total Audits Lifetime Energy Savings Efficiency

Maine Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

- Cost

Ratio 123 123 N/A $215,387 $0 N/A N/A

FY13 Plans : The Audit Program which was funded through ARRA concluded in April 2012 . There are no plans to offer t he Audit Program in FY13

.22 

# RESIDENTIAL PROGRAMS

Through its Residential Programs, Efficiency Maine administers programs to increase efficient use of electricity , natural gas, and other heating fuels in Maine ho mes . In some cases the programs are designed and implemented specifically for the benefit of low

- income customers, while other programs are designed for open access to all residential customers regardless of income.



## RESIDENTIAL LIGHTING PROGRAM

Overview : Lighting accounts for 5

- 10% of total energy use in the average American home

, costing
between $50 and $150 per year in electricity bills

. Compa ct fluorescent light bulbs (CFL s) use 75% less electricity for the same light output and last 6

- 10 t imes longer than trad itional incandescent bulbs. CFL s save enough in avoided electricity bills that they pay for their higher cost compared to an incandescent
bulb

. Nonetheless

, the higher initial cost of efficient bulbs

– both CFLs and LEDs

-- result in mos t people buy ing incandescent bulbs

. Efficiency Maine’s Residential Lighting Program works to overcome these barriers by collaborating with Energy Star lighting manufacturers and retailers to lower the price of CFLs
and other cost

- effective, high

- effici ency lights and to educate consumers on the benefits of efficient lighting. This program is used by customers of all income levels.

FY12 Activities: In FY12, as in the prior year, the program ’s delivery strategy was reimbursing retailers for lowering the ir CFL prices. For the vast majority of sales, the financial incentive was made automatically to the customer at the point of sale, requiring no paperwork. For the second full year, Efficiency Maine decided not to advertise for efficient lights and instea d focused all of its resources on reducing the price of efficient bulbs to make them more competitive with incandescent.

In FY2012, the program engaged a new distribution channel in addition to retailers. Efficiency Maine donated over 400,000 CFL’s to The Good Shepherd Food Bank for its four warehouses, 238 pantries serving 40,000 families per month.

Other activity specifics of the program in FY12 include:

Negotiated Memoranda o f Understanding with lighting manufacturers and retailers representing approximately 400 stores throughout the state , including the “big box” retailers
like Wal

- Mart, Home Depot, Lowes, Sam’s Club and BJs as well as hardware stores like23

Aubuchon and Maine Hardware, ensuring that 100% of Efficiency Maine’s mark down dollars

we re passed on to consumers in the form of lower CFL prices (typically a $1.25 per CFL reduction) ;

Conducting 80 in

- store demonstrations educating consumers and retail staff on the benefits of efficient lighting and appliances ; and,

Completing 5,306 store vi sits verifying marked down lighting pricing, training store staff, encouraging off

- shelf merchandising and rest o cking coupons (as appropriate).

FY12 Results: Combining the 400,000 CFL’s distributed through The Good Shepherd Food Bank with 1.7
million CFL s purchased at 400 retailers statewide resulted in the use of 2.1 million CFL s, nearly 12% more than the record breaking FY11 year. This makes Maine one of the highest users of CFL s in the
country

. The program was able to do this at the second lowest progr am costs per bulb ever

. Summary results for the program were as follows:

Table 1 2

– Residential Lighting Program Results

Total Participants Total Units Lifetime kWh Savings Efficiency

Maine Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

- Cost

Ratio N/A 2.1 million

CFLs 682,426,718 $ 4,172,340 $ 249,568 $ 43,701,746 9. 88

Program Evaluation

Efficiency Maine contracted with The Cadmus Group, Inc. to conduct an impact and process evaluation
of the Residential Lighting Program

. The study
, initiated in September 2011 and completed in November
201 2
, investigated lighting purchase and use, evaluated electric energy and demand savings, analyze d
program cost

- effectiveness, and examine d program design and delivery. Research m ethods included: telephone surveys, in

- depth interviews with program staff, statistical ana lysis of program price and sales
data , and on

- site me tering of lighting use from December 2011 through July 2012.

The impact evaluation found: A typical Maine household has 15 CFLs installed, which represents 26% of sockets. On average 73% of CFLs purchased are installed in the first year. The difference in wattage between CFLs purchased through the program and the bulbs they replace is 49 watt s. On average, each bulb saves 27 kWh in the first year and 37 kWh per year annually in subsequent years. The average Hours of Use (HOU) of CFLs is approximately 2 hours per day. The effective useful life of CFLs delivered by the program is 12.5 years.24

The net

- to

- gross ratio, which represents the estimated fraction of gross program savings that can be directly attributed to the program, was estimated to be 0.66 for the program overall, with higher NTG for standard CFLs relative to specialty CFLs. Applyi ng these findings to FY2011 program data , the evaluation estimated:

o First

- year veri fied gross energy savings of 52, 3 00 k Wh and net energy savings 34, 6 00 k Wh;

o In subsequent years, the bulbs delivered in FY2011 can be expected to result in verifie d gross energy savings of 71, 6 00 k Wh and net energy savings of 47, 4 00 k Wh; and

o Lifetime Gross Savings of 659,088 ,000 k Wh and Lifetime net savings of 434,932 ,000 k Wh. The Gross Realization Rate was estimated to be 107%, meaning that FY2011 verified gross savings from the evaluation are slightly higher than program reported savings. The Total Resource Cost (TRC) benefit

- cost ratio for FY2011 was estimated to be 9.62. Th is estimate is based on net savings and costs , with adjustments to lifetime savings to account for increased efficiency of baseline lighting due to federal legislation (EISA)

.

The process evaluation found : 93% of surveyed residents were aware of CFLs.

C ustomers’ primary reason for purchasing CFLs was most often to save energy (50%). The second most frequent reason was to save money (18%). Participating retailers consistently expressed satisfaction with the program, and praised the markdown component of the program, in particular, due to its simplicity and speed for both retailers and customers, relative to the coupon strategy. After the program shifted funds out of television advertising and into increased CFL incentives, along with in

- store promotions, retailers experienced increased CFL sales. The program is reaching low

- income customers, with approximately 1 in 5 CFL purchasers reporting income household income that would qualify for LIHEAP heating assistance. The residential lighting market is cha nging with the phase out of higher wattage incandescent bulbs due to EISA legislation. In the near

- term, most lighting manufacturers expect halogens,
CFLs and lower

- wattage incandescent bulbs will be in highest demand; over the longer

- term, they expect LED s, halogens and CFLs to maintain a strong market presence.

It is also worth noting that federal legislation (called “EISA”) requiring higher efficiency standards for certain classes of light bulbs will be phased in over the next several years. One resul t of this is that efficiency programs in Maine and everywhere else in the U.S. must begin to reduce the estimates of savings (of energy and money) from lighting programs compared to what would otherwise have happened without the programs. Efficiency Maine has factored these reduced savings into its results reported here.

FY13 Plans : The Residential Lighting Program strategy and activities planned for FY13 are the same as in
FY12. The Trust is looking carefully at diversifying its residential lightings to include other efficient25

alternatives, such as LEDs. Pilot projects in FY13 are expected to inform the strategy and scope for promoting these alternatives. The budget for the prog ram in FY13 appears in Appendix C.



## ENERGY STAR APPLIANCE PROGRAM

Overview : Efficiency Maine has worked with appliance retailers throughout the state to educate sales
staff on the benefits of ENERGY STAR electrical appliances and offer rebates for customer purchases of new, qualified units

. In the first half of FY12, this program offered $25

- 50 rebates as a prompt for
consumers to ask why a particular appliance qualifies wh ile others do not, which created an opportunity
for sales staff to explain t he long

- term financial benefits of efficient appliances.

Advances in residential appliance technology give homeowners the opportunity to save significant amounts of energy and water when they are in the market to purchase a new unit

. ENERGY STAR
clothes w ashers

, for example, consume about 20% less energy and 35 % less water than regular washers saving consumers about $23 per year on utilities. Likewise, an ENERGY STAR refrigerator uses 15 % less
than a non

- ENERGY STAR unit and save s $100 ’s per y ea r compared to a 1980’s refrigerator. ENERGY
STAR dehumidifiers use 15% less energy than a conventional one and can save users $20 per year. 8 It is
often the case that consumers make appliance purchasing decisions without understanding the energy cost implications.

FY12 Activities: A summary of the residential Appliance Program activities in FY12 includes:

Worked with retailers representing nearly 200 stores statewide to distribute rebate forms to customers who buy Energy Star refrigerators, clothes washers and deh umidifiers ;

Issued r ebates rang ing from $25 per dehumidifier to $50 per refrigerator or clothes washer ;

80 in

- store demonstrations educating consumers and retail staff on the benefits of ef ficient appliances and lighting; and,

1,492 store visits to label E NERGY STAR appliances, install/restore signs, train store staff, and restock coupons.

FY12 Results: This was Efficiency Maine’s third year rebating ENERGY STAR appliances . The program was highly successful. Mainers purchased more than 29 ,000 energy eff icient refrigerators, clothes
washers and dehumidifiers saving millions of dollars through avoided energy costs

. Summary results are
as follows:

8 See, www.energystar.gov

.26 Table 1 3

– Residential Energy Star Appliance Program Results

Total Participants Total Units Lifetime kWh Savings Efficiency

Maine Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

- Cost

Ratio N/A 29,822 60,675,000 $1,7 33
, 86 7 $1,248,740 $4,410,942 1.4 8

FY13 Plans : The ENERGY STAR Appliance Program strategy and activities planned for FY13 are the same as in FY12 , with the exception that Efficiency Maine is beginning to look at tightening product eligibility for rebates. At some point, the program may introduce new criteria limiting the financial incentives to a
sub

- set of ENERGY STAR models, i.e ., only those models that achieve the highest level of savings or offering tiered incentives based on each model’s level of efficiency

. The budget for the program in FY13 appears in Appendix C.



## REFRIGERATOR RE CYCLING PROGRAM

Overview : This program was started in January 2012 with the goals of reducing the number of secondary refrigerators and freezers in the state and accelerat ing the trading in of old units to be replaced by more efficient models . Reducing the number of refrigerators a nd freezers on the grid or upgrading those that stay on the grid both serve as effective ways to reduce the inefficient use of electricity.

FY12 Activities: This was a brand new program for Efficiency Maine. While quite successful in many
other states a nd identified in the Triennial Plan as one of the Residential Program priorities, it had not previously been deployed in Maine largely due to funding constraints. The first part of FY12 comprised making arrangements with a contractor to roll out the progr am in Maine. In FY12 , activities undertaken in the program included:

Designed the program details , issued a request for proposals, and secured services from sub

contractors;

Launched the program in January 2012;

Developed a website allowing residents to estimate their energy savings and schedule pickups

on

- line;

Ran media campaign including press events, direct mail, Google pay

- per

- click web ads, Yahoo Banner Ads, TV commercials, and print ads in newspapers across the state.27

FY12 Results: From January 2012 to July 2012, residents turned in 3,504 old refrigerators and freezers for recycling. Sixtee n were manufactured in the 1930 s and 252 were more than fifty years old. The
estimated total energy saved is over 22 m illion k W h assuming that the units were removed from the grid six years earlier than they would have been without the program.

Table 1 4

– Refrigerator Recycling Program Results

Total Participants Total Units Lifetime kWh Savings Efficiency

Maine Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

Cost Ratio 3,504 3,504 22,264,416 $ 5 75
, 259 $0 $ 1,581,067 2. 75

FY13 Plans : This program was originally budgeted for implementation over two years, covering FY12 and FY13. With new programs such as this, the Trust carefully tracks the early performance to confirm that the results are consistent with the Trust’s expectations. In the case of the Refrigerator Recycling

program the results were respectable, but slightly below, and different than, the Tr ust’s initial expectations. Rather than continue in that direction, the decision was made to wind down the program and shift the funds to other residential opportunities.



## LOW

- INCOME APPLIANCE REPLACEMENT PROGRAM

Overview : The purpose of this program is to increase the efficiency of electricity use in low

- income

eligible homes in Maine, and to satisfy the statutory requirement that at least 20% of the base level system benefit charge on electricity be used for the benefit of low income customers. The program advances this objective by paying to remove and recycle old, inefficient refrigerators and replace them with new, higher

- efficiency refrigerators.

FY12 Activities: As in prior years, t he Low Income Appliance Replacement Program in FY12 was implemented through a Memorandum of Understanding with MaineHousing which administered this program through Maine’s Community Action Agencies ( formerly “Community Action Programs” and
referred to as “ CAPs ” ). Through on

- site visits, the CAPs monitor ed refrigerators in Low Income Home Energy Assistance Program

- eligible homes and replace d them for free with high

- efficiency refrigerators
if the old units were found to be highly inefficient. Free CFL s wer e also installed. During the visits,

r esidents were given literature that described ways to save energy.

FY1 2 Results: The results of this program are aggregated with the other Low

- Income Program results in
Table 15
, below.28

FY13 Plans : Based on MaineHou sing reports that CAP agencies were having difficulty finding enough inefficient refrigerators in LIHEAP

- eligible residences, this program was discontinued in December 2011. As described in the two program descriptions that follow, funding to bene fit low

- income customers was shifted to making upgrades to the building envelope and heating systems of electrically heated, low

income residences

.



## LOW

- INCOME WEATHERIZATION PROGRAM

– ELECTRIC, SINGLE

- FAMILY

Overview : The purpose of this program is to increase the efficiency of electricity use in low

- income

eligible, electrically heated, single

- family homes in Maine, and to satisfy the statutory requirement that at least 20% of the base level system benefit charge on electricity be used for the benefit of low income

customers.

FY12 Activities: This program began part

- way through the fiscal year as a transition from the previous Low Income Appliance Replacement Program administered by MaineHousing. This program generally
followed the guidelines of the existing DOE Weatherization Assistance Program (WAP) in order to seamlessly use Maine’s existing WAP infrastructure and process. In the last 5 months of FY12, the

program e ngaged CAPs to audit and upgrade all LIHEAP

- eligible, electricall y heated, single family homes that they could find . It was estimated that the budget allocated for this program could support a maximum of 114 audits and 88 upgrades.

FY12 Results: In the limited period that the program was active, 25 homes were i dentifi ed as suitable
and were audited to develop an action plan for implementing cost effective energy efficiency measures. In total, eight single

- family homes received comprehensive upgrades

.

The contract to complete this program lasted through June 30, 2012

. At that time, results were compared with the parallel initiatives of delivering upgrades to multi

- family (as opposed to single

family) low

- income residences and investing in the Residential Lighting Program (which is known to have a significant percenta ge of participation from low

- income customers). The comparison revealed that the funds could save more energy and be disbursed more rapidly through the other initiatives.

FY13 Plans : Efficiency Maine will not continue using electric SBC funds for weatherization of single

family, low

- income homes in FY13. However, this should not be understood to mean that there are no programs in Maine for this sector and type of housing. T he Weatherization Assistan ce Program (WAP) will continue to operate using funds from the federal government and be administered by Maine’s designated WAP a dministrator, MaineHousing

.29



## LOW

- INCOME WEATHERIZATION PROGRAM

– ELECTRIC, MULTI

- FAMILY

Overview : The purpose of this program is to increase the efficiency of electricity use in low

- income

eligible, electrically heated, multi

- family homes in Maine, and to satisfy the statutory requirement that at least 20% of the base level system benefit charge on ele ctricity be used for the benefit of low income

customers.

FY12 Activities: As with the single

- family counterpart described above, t his program began in January 2012 as a transition from the previous Low Income Appliance Replacement Program. During the second
half of FY12 , the program :

Developed a data set of nearly 10,000 LIHEAP

- eligible, electrically heated residential units based on input from MaineHousing, USDA Rural Development, Housing & Urban Development and Housing Authorities across the state.

D eveloped a process for program delivery, that included: prioritizing, screening, and auditing buildings , gaining building owner permission, and then bidding and contracting for the installation of upgrades, and inspecting the upgrades with independent cont ractors.

FY12 Results: These are the summary results of the first half year of program activity :

Audited 1,376 units to identify cost effective energy efficiency measures ;

Upgraded 302 units,

Installed 16 high efficiency mini

- split ductless heat pumps ; and

Contracted another 832 units for upgrades, ( including 178 to receive ductless mini

- split heat

pumps )

.

The average savings per unit is more than a 20% reduction in electrical consumption.

F Y13 Plans : The program plan for FY2013 includes reviewing the eligible housing data base and the qualifications of the installer network to maximize efficiency and enhance quality control, but otherwise the program design and strategy is expected to remain the same . The budget for the program in FY13

appears in Append ix C.30 Table 1 5

– Low Income Program Results

Total Participants Total Projects Lifetime kWh Savings Efficiency

Maine Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

- Cost

Ratio 875 875 16, 298,995 $ 930,311

- $ 1, 849,337 1.99 This table reflects the combined results of the Low Income Appliance Replacement Program and the Low Income Weatherization Program for Electric Single

- Family and Multi

- Family homes. It does not include results associated with the Residential Lighting Program or Residential A ppliance Rebate Program, even though these programs convey a significant benefit to low

- income customers.



## RESIDENTIAL DIRECT INSTALL

Overview : The purpose of Efficiency Maine’s Residential Direct Install pilot and incentive is to break down barriers to entry for homeowners to participate in weatherization programs and take first steps toward making their homes more comfortable and energy efficient. Initial funding for this pilot was
allocat ed from the federal BetterBuildings Grant from the U.S. Department of Energy to encourage homeowners across the state to engage energy auditors , develop a plan for making energy upgrades to their homes, and complete a basic air sealing to their homes at th e same time the audit is performed

. This initiative is also designed to move homeowners a step closer to undertaking deeper energy retrofits such as insulating attics and basements and upgrading heating systems.

FY1 2 Activities: This pilot project was i nitially launched in April of 2012 and therefore only had a limited number of participants in FY12.

While not initially included in the launch of the program in the third quarter of FY12, Unitil System Benefit Charges allocated for energy efficiency for residential customers were incorporated into the Residential Direct Install pilot. Unitil funds are being used to “piggyback” on Better Buildings incentives to provide Unitil heating customers to be able to access as much as $1,200 per unit up to four uni ts for a minimum of 12 hours of targeted air sealing and insulation work per unit. The impact afforded by this moderate investment in building envelopes is expected to provide impressive results in FY13.

Participation in Residential Direct Install with a minimum six hours of air sealing and insulation work has also been deemed to providing minimum required energy savings for projects funded by unsecured PowerSaver loans. This enables homeowner to receive an energy audit and initial work at a significant
d iscount, then as an informed consumer with energy audit in hand, finance further energy efficiency improvements including more significant air sealing and insulation, upgrades of existing heating systems, or introduction of high efficiency space heating su ch as air source heat pumps.31

FY12 Results: Given the late start of the program in FY12, only 47 homeowners had participated in the air sealing incentive by June 30, 2012

. 9

Table 16

– Residential Direct Install Results

Total Participants Total

Units Lifetime Energy

Savings (MMBTU) Efficiency

Maine Costs Participant

Costs Lifetime Energy

Benefit Benefit

- To

Cost Ratio

47 47 8,243 $90,816 $

- $160,263 1.76

FY 13 Plans : ARRA BetterBuildings Grant Program funding provides sufficient dollars to support the completion of more than 2
, 500 air sealing project units , which will carry the program through most if
not all of FY13

. Given success of the program since its initiation
, it appears offer an attractive option for delivering natural gas resident ial program funds and other funds that become available specifically for residential energy consumption reductions in future years. The budget for the program in FY13 appears
in Appendix C.



## HOME ENERGY SAVINGS PROGRAM (PACE and PowerSaver Loans)

Overv iew : The Home Energy Savings Program (HESP) was designed to raise awareness about the
benefits of home weatherization and to encourage homeowners to make efficiency upgrades sufficient

to save at least 20 % of their total home energy use

. This started as a rebate program in January 2010 and transitioned to a loan program (referred to as PACE loans and PowerSaver loans) by FY12, as
described in more detail below.

Under HESP, Efficiency Maine initially allocated federal Recovery Act funds t o pilot a program offering rebates for customers completing a whole

- house weatherization retrofit

. For customers who performed an energy audit of their homes and then made improvements that were modeled to achieve at least a 25% efficiency improvement, Ef ficiency Maine offered a rebate for 30% of the job cost. This Tier 1 rebate was capped at $1,500. For customers who made improvement s that were modeled to achieve at
least a 50% eff iciency improvement, Efficiency Maine offered a rebate for 50% of the job cost. This Tier 2 rebate was capped at $3,000. Various promotional efforts were attempted including extensive advertising, specialized sales training for contractors, and a “bonus” rebate for early adopters. F unding for the rebate program was fully com mitted by the end of FY11 and the results were reported in the Trust’s FY11 Annual Report

.

9 As of November 2012, the number of homes participating in the Residential Direct Install had grown to more than 600.32

As the rebate pilot was ending, a new Revolving Loan Fund was launching under HESP to offer low

interest financing for customers who complete the audit and achieve a minimum 20% savings through
home energy upgrades

. The program design shift resulted in PACE loans and PowerSaver loans being
offered during FY12 in an attempt to advance the following objectives:

1. Financing: to provide financing for residential , whole

- house retrofits statewide

, across multiple
income levels ;

2. Market

- building: Building momentum in customer demand for energy audits and home retrofit s to a level sufficient to sustain experienced, proficient and certified contractors, geographically dispers ed across the state for at least the next decade;

3. Cost

- effective energy savings: achieving an average of at least 2 0 % energy savings per home through upgrades that more than pay for themselves in avoided energy costs;

4. Sustainability: Sustain funding to support the promotion of whole

- house retrofits over 10 years beyond the grant period

, establishing track record of program performance based on gathering and aggregating data that will prove the value of weatherization and attract investors who will

sup port the program beyond the grant period; and,

5. Scalability and Replicability: Continue to d evelop best practices and share guidance with other jurisdictions on how to develop, deliver and document a residential retrofit program that is scalable and applica ble to other regions of the country

.

FY1 2 Activities: In the Fall of 2011, Efficiency Maine conducted a second round of public hearing s to consider modifications to program rules for the Maine PACE Loan program. Alterations to technical rules

were made to provide greater flexibility for transfer of funds to participants.

More than 150 municipalities across the state have taken the steps needed to pass a local PACE ordinance and establish an administrative contract with Efficiency Maine. Residents of these towns comprise 72% of the state population and have submitted a total of more than 1800 loan applications since the launch of PACE in April of 2011. Efficiency Maine staff fielded requests for information and presentations to a significant number of a dditional municipalities seeking to opt in to the PACE program throughout FY12

.

The Trust also invested considerable time and effort managing and tuning the administrative process and structure for issuing and servicing loans. T he Trust has been working closely with its financial master service provider, AFC First, a company with experience issuing and servicing small residential energy loans in several other states , as well as with our technical services team, Conservation Services33

Group

. As the “master servicer,” this contractor provides all “ back

- office ” administrative operations for
the loans funded through this program . The master servicer is responsible for running a call center for inquiries about the Maine PACE program, conducti ng loan origination, researching applicant information
used in the underwriting process , packaging closing documents, providing closing services, and recording PACE agreements in the registry of deeds. The master servicer is also responsible for loan
servi cing, managing delinquency, discharging PACE mortgages, and providing statistical data reporting.

In addition to working with its partner

– AFC First

-- on the delivery of PACE, Efficiency Maine supported
AFC First ’ s application to be the provider of HUD pilot PowerSaver loans to Maine residents. Along with approval to provide PowerSaver loans, AFC First was granted funds from HUD to help offset the costs associated with establishing loans in Maine

. In the process, Efficiency Maine became a “HUD Title 1
G overnment lender

, ” which enabled Efficiency Maine to offer PowerSaver loans to customers throughout Maine, regardless of where they live in the state

.

During the year the Trust continued develop ment of education and outreach materials for distribution

to t owns and their residents about the process for receiving a PACE loan. The Trust enhanced its loan webpage to provide a wide range of information and resources at www.efficiencymaine.com/PACE

. PACE related pages provide documents and information for municipalities wishing to participate, a locator tool for homeowners to find local registered contrac tors and energy auditors, and links to apply
for loans on

- line. The website also links interested customers to two on

- line calculator tool s that help estimate if energy upgrades would be a worthwhile investment at a given home and the amount of savings the y can anticipate by switching fuels or upgrading heating systems.

The Trust also implemented steps to d r ive awareness of the benefits of home weatherization and
increase demand for home energy upgrades through: TV ads & public service announcements, radio ads and interviews, print advertising, PR articles, web ads, website, direct mail, phone campaigns, trade shows, trade associations, collaboration with non

- governmental organizations and community groups, speaking engag ements, and fairs.

FY12 Results : FY1 2 was the first full year in which PACE loan s were offered through Efficiency Maine. It also saw the launch of the PowerSaver loan program at the beginning of the last FY12 quarter.

Through the end of FY12, there we re 133 municipalities that had opted into the PACE program. 1,172 loan applications had been received resulting in 236 loans borrowing just over $3 million. Another $1.75 million in loan applications were still in process.

Through the end of FY12, the a v erage PACE l oan a mount was $12,739 and the average project financed through the program was calculated to save 40% compared to its prior energy consumption levels.34

FY 13 Plans : The p rogram strategy and activities planned for FY13 are the same as in FY12 . The Trust
will consider expand ing the range of financing tools available to customers so that weatherization projects can be within reach of a larger segment of Maine’s household income levels. The budget for the program in FY13 appears in Appendix C.

Table 17

– Home Energy Savings Program Results

Total Participants Total Projects Lifetime Savings (MMBTUs) Efficiency

Maine Costs Participant

Costs Lifetime

Energy Benefit Benefit

- to

Cost Ratio

236 236 320,313 $787,812 $ 2,542,421 $ 6,199,253 1.86

Program Evaluation of the Rebate Pilot

Efficiency Maine contracted with The Cadmus Group, Inc. to conduct an e valuation of the rebate pilot
initiative . The study , completed in November 2011, evaluated the energy savings (impacts) achieved by the participa nts and assessed customer experience

. Research methods included on

- site measurement and verification, engineering review and simulation modeling, and customer telephone surveys.

Key f indings of the evaluation were:

The gross program realization rate was estimated at 88% , meaning that verified savings from the
evaluation were 9 0% of program reported savings;
The evaluation found that program documented and reported measure installations matched
field observations , except at a few sites ; Blower door testin g values from the evaluation were 99% of program reported values;
The n et

- to

- gross (NTG) ratio, which represents the estimated fraction of gross program savings
that can be directly attributed to the program, was estimated to be 0. 86 for the program; and, The Total Resource Cost (TRC) benefit

- cost ratio was estimated to be 2.56 based on net saving s and costs. This compares to the Trust’s initially reported gross TRC value of 2.78, before adjusting for the realization rate and NTG. Program participants we re very satisfied, and reported being more comfortable in their homes and seeing noticeable decreases in their fuel bills.
The rebate motivated participants to initiate the audit and invest in improvements, as did the possibility of saving money on energy bills. The rebate provided a more effective incentive to complete energy upgrades compared to tax
credits. Customers reported that upfront costs presented the most significant participation barrier to making recommended energy upgrades.35



## REPLACEMENT HE ATING EQUIPMENT PROGRAM

Overview : Funded by a grant from the U.S. Department of Energy, this fuel

- neutral program offered rebates from $3 00 to $500 for energy efficient boilers, furnaces, water heaters and air conditioners. The goal was to encourage homeowners replacing their heating equipment to purchase the most energy
efficient option, regardless of fuel type

.

FY12 Activities:

Worked with retail stores to promote in

- store purchases , supplying training, point

- of

- sale sign s, brochures and rebate forms ;

Collaborated with HVAC professionals to promote the program to homeowners ;

Designed the Efficiency Maine website to describe the program, enable customers to make on

line reservations and download rebate claim forms ;

Mainta ined the web site with updates about outstanding fund balance , providing notice to all
consumers and vendors when the limited funds were fully committed

.

FY1 2 Results:

From July 2011 to December 2011 when all funding was fully invested, nearly 1,0 00 homeo wners selected energy efficient heating system components , encouraged by the incentives provided by the Efficiency Maine program

. The program saw a broad range of efficient heating and cooling systems installed, primarily oil or gas boilers and furnaces. I nstallers also gained experience with new technology as an increasing number of customers started to ask about heating system efficiency. The energy saved over the full life of the installed measures is estimated to be the equivalent of nearly 850,000 ga llons of heating oil.

Table 1 8

– Replacement Heating Equipment Program Results

Total Participants Total Units Lifetime Savings (MMBTUs) Efficiency

Maine Costs Participant

Costs Lifetime Energy

Benefit Benefit

- to

Cost Ratio

976 976 117,827 $ 812,616 $ 236,528 $ 3,094,014 2.95

FY13 Plans : Because no fu rther funding is available, the program was discontinued in December 2011 and there are no plans to restart it.36



## LOW

- INCOME WEATHERIZATION ASSISTANCE PROGRAM (WAP) BY MAINEHOUSING

Maine State Housing Authority is the designated administrator of the Weatherization Assistance Program that provides grants to low

- income homeowners and renters to reduce energy costs. This program is funded with federal funds. Weatherization improvements may include insula tion, weather

stripping, caulking, and some incidental and/or safety

- related repairs. MaineHousing offers this program to consumers through Community Action Agencies who screen people for eligibility as part of
the Low

- Income Home Energy Assistance Progra m (LIHEAP) application process. Up to 15% of MaineHousing’s LIHEAP budget may also be spent on weatherization (including heating system repairs/replacements). The Efficiency Maine authorizing statute requires the Trust to report on
activities of the WAP in the annual report.

Table 1 9

– Weatherization Assistance Program Results37 

# ALTERNATIVE ENERGY PROGRAMS

Through its Alternative Energy Programs, Efficiency Maine administers a variety of offer ings for business, institutional and residential customers. This section of the Annual Report describes the
Alternative E nergy Programs delivered in FY12 . Unlike prior sections of the report, this section is not organized by the source of the funds used to pay for the programs.

The electric SBC

- funde d Solar/Wind Rebate program was a statutorily mandated program for Efficiency Maine to operate, but the statutory authority made no mention of meeting a cost

- effectiveness standard. The Renewable Resource Fund was also a statutorily mandated program that directed Efficiency Maine to promote “research and development” and “demonstration projects” of emerging technologies, activities which are known to rarely be cost

- effective in terms of avoided energy costs, yet may serve a valuable public policy purpose.



## SOLAR/WIND REBATE PROGRAM

Overview : The law that created the Solar/ Wind Rebate P rogram and authorized funding through a System Benefit Charge that funded these rebates was repealed in FY11 and has not been re

- authorized

. Remaining Solar/Wind Rebate Program funding and administration by Efficiency Maine was subsequently transferred to the Renewable Resource Fund by the state legislature.

Efficiency Maine continued to fund r ebates using ARRA funds through all of FY12. Mai ntaining a rebate

program through FY2012 was viewed as critical to minimize disruption to the renewable energy related businesses and jobs that have developed in the past seven years of rebate availability.

With guidance from the Legislature, Efficiency M aine undertook a rule making process in December 2011

to develop a modified approach to incentivize cost

- effective alternative energy installations. The new
incentive program was launched in April 2012 . It inc orporate s an elevated quality assurance system to ensure best practices for installations in the state for long

- term system operation and maximized
financial return for program participants.

FY12 Activities: The Trust administered a rebate program for solar thermal, solar PV, and small wind projects that met established criteria for project eligi bi lity. In all cases, the rebates were limited to systems located on the “customer’s side of the meter.” This means they are helping the customer offset consumption of power from the grid, and that the syst ems are not sized or intended for commercial generation of electricity for sale onto the grid. As of April 2012, rebates are provided only to cost

-38

effective installations where the end user is demonstrated to have a simple payback on their
investment. Und er the new program structure, rebate amounts are based on projected annual energy production instead of a percentage of cost across all renewable technologies.

FY1 2 Results: The rebate program assisted Maine customers in installing a total of 409 renewable energy systems in FY12.

Solar thermal installations

– 2 30

Solar PV installations

– 1 76

Small wind installations

– 3

Part of the rulemaking on the Renewable Resource Fund c overed the establishment of an alternate cost

effectiveness test specifically for renewable energy installations. This test compares the projected value of the energy saved annually by the end user against the annual net cost of the installation after tax
credits and incentives. The Trust applied this approach to calculating cost

- effectiveness presented in
Table 20

.

Table 20

– Solar/Wind Rebate Program Results

Total Participants Total Projects Lifetime Energy Savings (MMBTU) Efficiency

Maine Costs Participant

Costs Lifetime Energy

Benefit Benefit

- to

Cost Test

409 409 197,272 $ 657,901 $ 6,953,917 $ 5,824,103 0.84

Because the cost

- effectiveness is below 1, Efficiency Maine will track the performance of this program very closely. Several points are worth noting about the cost

- effectiveness. First, Efficiency Maine does not have information about what federal tax credits customers may have taken advantage of. Because there are very significant federal tax credits available for sol ar installations, we expect that the participant’s actual costs are quite a bit lower than reflected in Table 19 . If this is correct, then it could
be sufficient to move the cost

- effectiveness above 1. Second, the Efficiency Maine costs to support the program are very modest, and they have a greater than 10

- to

- 1 leveraging effect of private funds. Third,
the cost s of renewable energy systems (notably PV) has dropped significantly in recent years which is bringing these renewable systems more into the mainstream. Keeping this program available to support the marketplace of small suppliers and contractors who help customers install their own, on

- site energy producing systems improves the likelihood that as conventional energy prices rise and/or renewable system costs fall, the market infrastructure will be there to serve Maine’s customers with more options.

FY1 3 Pl ans : The Renewable Resource Fund rebate structure, strategy and activities planned for the FY13 will be the same as in FY12. Incentives are expected to remain a primary tool for promoting
installation of customer

- sited renewable systems, until all Solar/ Wind Law funds are fully expended, currently projected to occur around the end of FY13. The budget for the program in FY13 appears in Appendix C.39



## RENEWABLE RESOURCE

-- R ESEARCH, D EVELOPMENT & DEMONSTRATION
PROGRAM

Overview : This program is intended t o address the desire for Maine to offer support for the research, design and demonstration of emerging clean energy technologies. As provided for in statute, the program funding that is authorized for funding comes from voluntary contributions made by Mai ne electricity consumers, and from electricity suppliers who elect to meet their renewable portfolio standard obligations by making alternative compliance payments. In recent years the revenues from these sources has been extremely limited, and no other r evenues were secured in FY12 to fund this

program.

FY12 Activities: As required by new legislation, the Trust undertook a rulemaking creating Chapter 103: Renewable Resource Fund Regulations in order to define criteria for the award of renewable energy technology grants and to provide rebates for cost

- effective installations of renewable energy technology.

The rule includes selection criteria for the competitive bid process for renewable energy research and development projects by Maine educationa l institutions; selection criteria for the bid process for community demonstration projects requiring use of cost

- effectiveness and other criteria in selecting projects to fund. The rule designates qualification criteria for rebates of renewable energy tec hnologies including means of determining cost

- effectiveness and meeting quality assurance requirements.

Given limited amounts of available funds in the Voluntary Contribution portion of the Renewable Resource Fund and the requirement by the legislature to establish new rules for determining cost

effectiveness of renewable technology installations, no RFPs seeking proposals for community demonstration or research and development projects were issued in FY12.

FY1 3 Plans : Voluntary contributions and reve nues will be directed through competitive RFP’s to cost

effective community demonstration installations of renewable energy technologies and research and development projects at applicable Maine University system educational institutions. Per alterations t o the Renewable Resource Fund law made during the 2012 legislative session, the Trust anticipates establishing a rule making process for renaming the fund and to also clarify the availability of voluntary funds to support energy efficiency technology as wel l as renewable ene rgy technology. The budget for the program in FY1 3 appears in Appendix C.40 

# CROSS

- CUTTING STRATEGIES 10



## EDUCATION AND INFORMATION

Overview: Through its Energy Education and Information Program , Efficiency Maine strives to increase
consumer awareness of cost

- effective options for conserving energy by installing energy

- efficient equipment, using energy more efficiently, using more alternative or renewable energy, and financing
these measures. Ene rgy Education and Information Programs convey to Maine businesses and homeowners the numerous benefits resulting from energy efficiency. Some of these benefits include: saving money, time and resources; promoting energy independence; reducing harm to the e nvironment and human health; helping the Maine economy through job creation and job retention; and reducing operating and maintenance costs. In the case of homeowners, EMT conveys the additional benefit of increasing home comfort.

Through numerous commun ications channels, Efficiency Maine urges consumers who are planning to purchase new lighting, appliances, electronics, and other equipment to consider buying the more energy efficient models available . Information is disseminated through the Efficiency Ma ine web site, printed flyers and brochures, traditional advertising, social media, and other multimedia tools, as well as targeted training and industry events such as forums and symposia.

FY12 Activities:

Save Like a Mainer Campaign

Throughout FY12 , Ef ficiency Maine conduced the “Save Like a Mainer” energy efficiency awareness campaign. The campaign, which promotes a culture of conservation, unites Mainers in a common purpose by highlighting prominent energy efficiency success stories. These stories ta ngibly demonstrate how energy efficiency saves energy and money, increases home comfort, and provides lasting value to
homeowners and businesses. The individuals and companies featured serve as models that inspire
others to Save Like a Mainer. Stories re present demographic and geographic diversity, target various Efficiency Maine program audiences, and meet other criteria.

Residential stories consist of homeowners who have participated in various HESP, PACE, and PowerSaver programs. For businesses, iconi c Maine companies both large and small are selected based

10 This category of programs and initiatives was previously referred to as “Enabling Strategies” in the Triennial Plan and other reports.41

on the amount of energy and/or money the organization saved installing various measures, as well as how many jobs were created as a result of Efficiency Maine programs.

Communication channels includ ed advertising through web sites, banner ads, social media, and traditional advertising (print ads, TV, radio, etc.), as well as through outreach such as Chamber events, trade shows, speaking engagements, and earned media.

Schools for Energy Efficiency ( SEE)

Delivered by a non

- profit organization through a grant from Efficiency Maine, the Schools for Energy Efficiency program enlists and organizes volunteer facility managers, teachers and students at designated schools to set energy saving targets, devel op and implement a plan to meet those targets, and monitor, measure, and report on progress.

Last year, two school districts

– SAD 57 Waterboro/Massabesic School District and SAD 60 North Berwick

-- consisting of 15 schools participated in the program.

Community Energy Nights

Delivered by the Maine Math and Science Alliance, organizers targeted eight Maine towns and cities where schools have been active in energy efficiency initiatives and hosted “Family Energy Nights” for students and parents. These s essions are meant to be a discovery opportunity for both students and
their families to immerse themselves in hands

- on energy and energy efficiency demonstration projects
at their schools.

Building Operator Certification (BOC)

Through a collaboration with the Maine Community College System, Efficiency Maine offered three BOC
Level I courses in FY12, and a BOC Level II course. Four other regional courses were offered through other efficiency program administrators in Massachusetts and New York

. BOC we binars were also offered at various times throughout the year for continuing credits. A Commercial Energy Auditor II course was also offered to increase resources for commercial building energy analysis and to fill in the gap for multi

- family building ana lysis skills.

Maine Green Schools Program

Efficiency Maine partners with fellow state agencies whenever possible. One example of this effort is the Maine Green Schools program where the Maine Department of Environmental Protection receives an annual grant of approximately $15,000 from the federal Environmental Protection Agency and then42

works with Efficiency Maine to deliver mini

- grants to schools for energy efficiency projects. This year the schools that participated were:

School Project Brunswick School Department Energy monitoring equipm ent and analysis St. John Valley Technical Center Energy audit Warsaw Middle School, Pittsfield Window improvements Houlton High School Heating pipe insulation
Oxford Hills School District Energy monitoring equipment and analysis



## INNOVATION PROGRAM

Overview : Efficiency Maine’s Innovation Program aims to support pilot programs for assisting in the
demonstration of commercially available, but not yet well

- established, energy efficiency products or new ways of delivering cost

- effective measures. Through the Innovation Fund, Efficiency Maine offers competitive grants to support market players seeking to demonstrate technologies or program designs that, if they were deplo yed at scale, could show substantial energy savings opportunities for the state.

FY1 2 Activities: During FY12, t he Trust issued a n RFP seeking proposals to demonstrate innovative heating alternatives for space and water heating customers in Maine.

Th e Innovation Fund Program Request for Proposals resulted in seven proposals for review and

two award s ;

Grants were awarded to Bangor Hydro Electric Company to support a pilot initiative focusing on
ductless mini

- split heat pumps and to Vermont Energy Investment Corporation to test the feasibility of heat pump water heating technology in Maine

.

FY1 3 Plans: The Innovation Fund Program strategy and activities planned for FY1 3 are the same as in

FY1 2 . The budget for the program in FY1 3 appears in Appendix C.43



## RESEARCH & EVALUATION

Overview : The purpose of Efficiency Maine’s Research and Evaluation strategy is to provide data

- driven research and analysis to inform program delivery, verify program results and ensure ongoing program and organizat ional improvement.

The third

- party evaluations conducted as part of this strategy are designed to:

D ocument and verify the program impacts on energy and demand savings and program cost

effectiveness relative to goals ;
U nderstand why effects occurred and identify opportunities for improvement in program design and implementation ;
A ssess program ef fects on the energy marketplace; and, Inform adjustments in program strategies and allocation of resources

.

FY1 2 Activities : Efficiency Maine completed four evaluation projects (see FY12 Results) and initiated evaluation projects for the Residential Lighting Program and the PACE Loan Program, both of which will be completed in FY13.

Table 2 1

– FY12 Research and Evaluation Proj ects Initiated Program Type Prime Contractor Budget Funding Source Start End Residential Lighting Program Impact &

Process The Cadmus Group,

Inc. $200,000 SBC 9/26/11 11/2/12

PACE Loan Program Impact &
Process Opinion Dynamics

Corporation $395,000 ARRA

- Better Buildings 11/28/11 6/30/13

Baseline and Opportunities Study Market

Assessment The Cadmus Group,

Inc. $300,000 SBC 3/26/12 12/31/12

Data collection and anal ysis methods employed in these evaluation projects include:

Review of program databases, project documentation and program materials;

In

- depth interviews with program staff and stakeholders;

S urveys of program participants, non

- participants and trade allies ; and, Site visits, including on

- site data collection (which may use data log gers to measure performance of lights or other equipment) , and verification

.

In FY12, Efficiency Maine made several upgrades to its database of energy efficiency projects. The new platform consolidates the data for both Business Programs and the Resident ial Programs. It brings increased capacity to ensure consistent and accurate estimates of energy savings. The new system also enables contractors (such as Qualified Partners) to expedite the processing of incentives, eliminating significant paperwork.44

FY12 Results: During FY12, Efficiency Maine completed independent evaluations of four programs as described in the following table.

Table 2 2

– FY12 Evaluations Completed Program Type Prime Contractor Budget Funding Source Start End
Business Incentive Program Impact &

Process Opinion Dynamics

Corporation $200,000 Conservation Program Fund (SBC) 6/15/11 11/30/11

Home Energy Savings Program Impact The Cadmus Group, Inc. $150,000 ARRA

- SEP 4/18/11 11/30/11

Commercial Project Grants Impact Navigant Consulting, Inc. $150,000 ARRA

- SEP 4/18/11 1/31/12

Large Project Grants Impact Navigant Consulting, Inc. $150,000 ARRA

- SEP 4/18/11 3/31/12

All but the Commercial Project Grants program evaluations were reported previously in this report along
with the reporting on activities and results of the program. Because the Commercial Project Grants program activity was reduced to monitoring and oversight in FY12 , with no new project activity or savings, this program did not receive a individual write up in this Annual Report. We have summarized the evaluation results for that individual program here.

Commercial Project Grants Program Evaluation

Efficiency Maine contracted with Navigant Consulting, Inc. and subcontractor Turner Building Science to
conduct an impact evaluation of the Commercial Project Grants program . The study, completed in January 2012, evaluated the energy savings (impacts) achieved by the Commercial Project Grants. The evaluation covered the 51 grant projects completed through December 31, 2011. Research methods
included on

- site measurement and verification, engineering review, and telephone surveys.

The k ey f indings by the evaluation were :

Realization rates (evaluation verified savings / program reported savings) were estimated to be :

o 0.67 for Site Energy Savings (all fuels in MMBtu)

o 0.76 for Annual Electricity Savings

o 0.66 for Fossil Fuel Savings

o Electric efficiency projects and renewable electricity projects had higher realization rates than other project types
The net

- to

- gross ra tio , or estimated fraction of savings that can be dir ectly attributed to the

program, was :

o 0.62 for Site Energy Savings (all fuels in MMBtu units)

o 0.79 for Electricity Savings

o 0.60 for Fossil Fuel Savings

o Electric efficiency projects and renewable projects (electric and other) had higher NTG ratios than other project types45

The Total Resource Cost (TRC) benefit

- cost ratio was :

o 2.85 based on gross savings and costs

o 2.35 based on net savings and costs

FY1 3 Plans: During FY13 Efficiency Maine will comple te the Residential Lighting Program and the PACE Loan Program e valuations, which began in FY12. It will also conduct an evaluation of the ARRA

- funded
Retro

- Commissioning Pilot Program, and will plan for future evaluations of residential and business

progr ams. The budget for the program in FY1 3 appears in Appendix C.46



# Finance and Administration

Audited Financial Report

The Trust’s certified public accountant has issued its audit of financial statements as of the year ended June 30, 2012. The report was unanimously accepted by the Board of Trustees.

The report provided the following opinion, indicating that the audit was:

[C]onducted in accordance with auditing standards generally accepted in the United States of America. Those standards req uire that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financia l statements. Au audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of Efficiency Maine Trust, as of June 30, 2012, and the respectiv e changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. 1.

The audited revenues, expenditures and balance sheet for FY12 are summarized in the following tables.47 Ta ble 2 3

- FY12 Revenues

Fund Source Funding Amount ($) System Benefit Charges 13,888,855 · Electric 13,238,286 · Natural Gas 650,569 Renewable Resources Fund 110,349 Federal Funds A 11,665,299 · ARRA State Energy Program (SEP) 5,902,197 · ARRA Appliance Rebate Fund 419,682 · ARRA Energy Efficiency Community Block Grant (EECBG) 3,487,615 · ARRA Better Buildings (PACE Revolving Loan Fund) 1,672,815 · DEP School Energy Project 11,852 · State Energy Program

- Annual 81,628 · State Energy Program

- Multi

- Family 15,675 · USDA 73,835 Maine Power Reliability Project (MPRP) Settlement 1,750,000 Forward Capacity Market 1,861,206 Regional Greenhouse Gas Initiative (RGGI) 4,706,486
Interest on Accounts and Loans and Other Revenues 179,827 Renewable Resources Funds 22,536

Total Revenues 34,184,558

A ARRA is the American Recovery and Reinvestment Act ; DEP is the Department of Environmental Protection ; USDA is the U.S. Department of Agriculture

.

The Trust has benefited from a number of federal grants, most of which are funded through the American Reinvestment and Recovery Act (ARRA). The ARRA funding streams will begin expiring in FY
2013 and there are no expectations that these funds will be replaced with other federal funds. One of the ARRA programs, which will expire in September 2013, is being used to develop a revolving loan fund for home energy projects. It is expected that as the loans made with these funds begin to make repayments, the repayment stream can be used to make new loans on a funds

- available basis or to leverage revenue bond issues used to enhance the loan fund, although there is no timeline or specific plan in place to purs ue the path of bonding.48 Table 2 4

- FY12 Expenditures

Use of Funds Amount ($)
Administration 3,428,155 Residential Programs 10,822,940
· Low Income 915,772
· Non

- Low Income 9,907,168
Business Programs 20,048,061
Cross

- Cutting Strategies 2,903,776 · Financing and Training 4,261 · Codes and Standards 81,484 · Education and Awareness 822,415 · Evaluation 1,128,922 · Alternative Energy Program 729,858
· Innovation 136,836 Interagency Grants 830,491

Total Expenditures 38,033,423 11

As described elsewhere in this Annual Report, during 2012, the Trust’s major program areas were residential, business and enabling strategies. The residential programs were highlighted by the PACE loan program, which provided low

- interest financing for wh ole house weatherization jobs and relied on ARRA funding, price incentives for compact fluorescent light bulbs (CFLs), and weatherizing electrically

heated low

- income homes. Other residential programs included rebates for appliances and refrigerator

recy cling. The Business Incentive programs provided incentives for both a prescriptive list of energy efficiency equipment and for custom projects. The enabling program is intended to provide broad,
market

- wide support for meeting long term efficiency target s. Financing and training activities included commercial loans through a revolving loan fund and Building Operator Certification (BOC) training. Education and awareness activities included funding for workforce development through the community colleges and the establishment of an efficiency awareness campaign to share testimonials and case studies of successfully completed home and business energy upgrades. Finally, during 2012, the program staff commissioned third

- party evaluators to complete measureme nt and verification projects that will be undertaken during 2012 and 2013.

11 Expenditures in this table reflect all payments made by the Trust during FY12. This includes payments made for project s that were awarded in FY11 but not completed and paid until FY12, as commonly occurs on the larger projects funded through the Large Customer Program and the Commercial Grant Program. The Trust reports the programs’ energy savings, costs, and cost

- effecti veness in the fiscal year in which the projects were awarded, which explains the discrepancy between the Total Expenditures in this table and the Efficiency Maine Costs in Tables ES

- 1 and ES

- 2 and in Appendices A and B.49 Table 2 5

- Balance Sheet

Classification Amount ($)
Assets 44,082,299

· Cash and cash equivalents 18,115,752 · Investments 17,205,963 · Receivables 8,579,133 · Capital Assets 109,990 · Other Assets 71,461 Liabilities 3,872,218

· Payables 3,260,926 · Payroll liabilities, short & long term 75,865 · Deferred Revenues 525,965 · Lease obligations 9,462
Net Assets 40,210,081

· Capital Assets, shown net of depreciation 100,528 · Restricted Net Assets (fund balance) 40,109,553

The restricted net assets are the result of a very large, multi

- year federal grant being only partially expended in FY12 and a variety of smaller program funds that were committed but not fully spent down in FY12. Key elements of the restricted net assets includes: More than $20.5 million of the restricted net assets are attributable to the Revolving Loan Fund used for PACE and PowerSaver loans to help Maine homeowners weatherize their homes and upgrade their heating systems (the Revolving Loan
Fund was a warded to the Trust as part of a multi

- year grant from the U.S. Department of Energy using federal Recovery Act funds); Approximately $4.5 million of the restricted net assets was budgeted for the weatherization of electrically

- heated, low

- income homes in the second half of FY12, but the funds were not fully expended until the first half of FY13; Nearly $5 million of the restricted net assets comprise RGGI funds that are committed to the Large Customer Program, most of which was awarded through two rounds o f competitive bids in FY12 where the project invoices were not billed to the Trust until FY13, and the balance of which was held back for a new round of competitive bids in the first half of FY13; nearly $1.4 million of the restricted net assets was transf erred near the end of the fiscal year through the settlement of the Maine Power Reliability Program, which directs that fixed portions of the
funds be used for low

- income weatherization, large industrial efficiency projects, and for other EMT
electric cons ervation programs; $1.2 million is for the small renewable system rebates that received additional federal funding in FY12 to extend the life of the program into FY13; Nearly $800,000 was for the Small Business Loan Fund; and more than $650,000 was slated for natural gas programs where implementation was temporarily slowed in order to ensure that projects would meet the cost

effectiveness criteria; and $1.1 million was for accelerated retirement of second refrigerators/freezers that was budgeted to span FY1 2 and FY13 and was only partially spent in FY12.

The Trust’s rate of expenditure is a function of customer uptake for financial incentives and the Trust’s desire to maintain relatively steady and predictable support for the marketplace from the end of o ne fiscal year to the beginning of the next. The Trust prefers to end each year with a small amount of carry

-50

forward funding for any program that is designed to continue into the next year rather than running out of funds and creating a gap of one or more months in market support. Generally, only small fund balances are expected in future years. As the volume of federal ARRA funds that was available in FY11 and FY12 is expended, the Trust does not forecast having significant fund balances in FY13 and bey ond except to the extent that the Revolving Loan Fund is carried forward.

The Trust did not have any capital asset acquisitions during the year. The Trust had no borrowing activity during the year and has no plans for borrowing during 2013.

Written Po licies and Procedures



### The Trust developed and instituted new written policies and procedures to ensure standardized implementation of various financial and administrative practices associated with administering programs. The Contract Invoice Process: Roles and Responsibilities helps to ensure segregation of duties and reduces risk of paying for unallowed costs. The Efficiency Maine Trust Monitoring and Compliance Plan, adopted by the Board on September 9, 2011 applies to all grants administered by the Trust and complements the invoice process procedure to ensure proper documentation of payments that are reimbursed by the Trust.

During FY12, another improvement for the Trust was the development and establishment of the
Confide ntial Information Management System (CIMS). This system was modeled on a system implemented by Efficiency Vermont to safeguard the confidentiality of utility customer data, and was developed with assistance from the Vermont Energy Investment Corp. who had designed the system for Efficiency Vermont.

Financial Management System

The Trust executed a significant upgrade to its financial management system in FY12. Following a competitive bid process, the Trust shifted its books into the MUNIS financial manage ment system. The MUNIS system is designed to allow fund accounting, and better enables the Trust to perform its accounting using on an accrual basis.51



# OTHER INITIATIVES

ISO

- NE FORWARD CAPACITY MARKET (FCM)

Overview : Efficiency Maine Trust has been participating in ISO

- New England’s Forward Capacity Market (FCM) since its inception in 2006. The forward capacity market is a market

- driven approach toward ensuring there are enough generation and demand resources on the electrical grid to meet the peak
demands each summer and winter. Efficiency Maine and other providers of demand resources offset the need for generation during these peak periods, and can participate in this market. One megawatt of saved energy is given the same value as one megawatt produced by a generator.

At the most basic level there are four steps to the forward capacity market. The ISO

- NE forecasts the peak demand that will need to be met three years ahead of time, hence a forward market. It the n ask s for a show of interest from owners of new or existing generation units, completed energy efficiency project s, or distributed generation projects who are interested in providing capacity during this future year. ISO

- NE then puts those potential marke t participants through a qualification process to ensure each is a viable source of providing or reducing energy during peak load hours. Finally

, ISO

- NE runs a descending clock auction for all qualified participants. Those who own the most cost

- effective resources are given a capacity obligation, and are guaranteed revenue for the capacity they provide.

As a market participant

, t he Trust assumes three areas of responsibility: (1) to report on our progress meeting existing capacity obligations from prior a uctions; (2) to show the ISO

- NE that Efficiency Maine’s

program results meet the ISO

- NE measurement and verification protocols ; and (3) to assess the risks and rewards of future auctions, and participate accordingly.

Each month Efficiency Maine reports to ISO

- NE on the increasing amount of capacity our programs have
delivered to date. All measures that Efficiency Maine has helped customers to install are recorded in the Efficiency Maine database. The database takes into account how often , and at what time of day, those pieces of equipment are in operation, and adds up the total amount of aggregate capacity. To ensure the accuracy of this report

, the ISO

- NE requires an annual independent certification to review the processes behind Efficiency Maine’s monthly reports. All aspects of Efficiency Maine’s tracking, verification, and reporting activities are reviewed and certified for their accuracy and compliance with the rigorous requirements of ISO New England's measurement and verification manual.52

To date, Efficiency Maine has accumulated more than 63 megawatts ( MW ) of summer demand savings, and this number grows each month. During FY 1 2, Efficiency Maine participated in one f orward auction and prepared for a second. In April of 2012, Efficiency Main e took on an obligation to supply an additional 15.7 MW in June of 201 5 during the Sixth Forward Capacity Auction (FCA 6 ) at a price of $ 3.434 per kilowatt per month. In June of 2012

, the Trust completed its qualification package for FCA #7.
The forward au ction for the seventh auction (FCA 7) will occur in February of 2013.

Th e chart below shows a summary of th e amount of demand savings that Efficiency Maine has delivered, is obligated to deliver via the FCM auctions, and the amount of revenue expected from this
market. Revenues are estimates based on past performance of Efficiency Maine program s and the price
of its Capacity Supply Obligation (CSO). Actual revenue will vary based on fees and incentives should Efficiency Maine’s programs exceed the CSO.53



## NON

- TRANSMISSION ALTERNATIVE (NTA)

– PILOT PROGRAM

Overview: In the final settlement of the Maine Power Reliability Program docket, t he Maine Public
Utilities Commission approved the establishment of a pilot program to test the ability of non

transmiss ion alternative resources

– distributed generation, energy efficiency, and demand response

– to defer or displace the need for new transmission lines and substations while meeting grid reliability
standards

.

FY12 Activities: Efficiency Maine, as a potent ial deliverer of low

- cost energy efficiency capacity, has participated in the docket (Docket No. 2011

- 108). Throughout the proceeding, Efficiency Maine has provided data and analysis to represent the interests of customers and contractors who may be able to deliver non

- transmission alternatives (NTAs) , at or below the cost of transmission, by means of implementing energy efficiency upgrades. Efficiency Maine urged the pilot program to institute procedures and standards that would enable energy efficiency resources to compete on a level playing
field with other transmission and non

- transmission resources.

FY12 Results: On April 30, 2012, the Commission issued an order approving the basic outlines of a process for a pilot program to deliver non

- transmission alternatives in the Boothbay Harbor segment of the grid in Central Maine Power’s utility territory. The program is required to use competitive solicitations to select resources, and because it is a pilot program, provisions are included to ensure that

a v ariety of resources are selected and tested, so long as their cost is less than the cost of conventional transmission capacity and they can operate reliably during peak demand periods

.

FY13 Plans: The NTA pilot is scheduled to issue an RFP seeking NTA resources in September, 2013 and to award contracts for winning bidders late in 2013 and into early 2014. Resources will be expected to be operational by July 1, 2014. Efficiency Maine will review opportunities to deliver NTA capacity through energy effi ciency projects and bid in resources that appear to meet the criteria for the bid and
cost less than transmission.



## LEGISLATIVE RECOMMENDATIONS

As provided in statute, t he Annual Report must include “Any recommendations for changes to the laws relating to energy conservation.” 12

12 35

- A MRSA §10104(5)(C).54

In the course of recent discussions surrounding approval of the Trust’s Second Triennial Plan, the Board made several findings about the targets contained in section 10104(4)(F) of the Efficiency Maine Act. 13

The Trustees wished in their findings to convey their interpretation of the long

- term statutory targets (such as weatherizing 100% of homes by 2030, or saving 30% of natural gas by 2020, or reducing peak electricity demand by 100 MW by 2020) as indicating desired levels of performance, ( or “goals” ), but not to constitute required minimum levels of performance.

T he Board’s findings expressed the view that “... certain of the referenced targets are not attainable from a technology and cost

- effective standpoint

. ” This finding was applied in particular to the long

- term targets to: weatherize 100% of homes and 50% of businesses by 2030; achieve 30% electricity savings by 2020; and achieve 30% natural gas savings by 2020. As such, the Board recommended “that the

L egislature should review the original targets and amend as needed

.. .” and also review the requirements of paragraph (4)(C) of Title 35

- A MRSA section 10104 . ( “Findings of the Efficiency Maine Trust Board,” November 7, 2012, p. 3.)

Therefore, the Legislativ e Recommendation respectfully submitted in this report is a request for the Legislature to review the targets found in section 10104(4)(F) of Title 35

- A (the Efficiency Maine Trust Act). The Trust’s recommendation is further to amend these targets as need ed to reflect the likelihood of these targets being achieved considering the time left to the target dates, the state of technology, and the potential for reaching the targets consistent with the Trust’s requirement that it use its funds only on “cost

- effe ctive” projects.

13 35

- A MRS A §10104(4)(F).55 

# APPENDICES56 

## APPENDIX A

FY2012 EFFICIENCY MAINE PROGRAM IMPACTS

SBC AND RGGI FUNDED PROGRAMS

ARRA FUNDED PROGRAMS57 

## APPENDIX B

EFFICIENCY MAINE PROGRAM EXPENDITURES58 

## APPENDIX C

EFFICIENCY MAINE TRUST FY2012 BUDGET APPROVED BY THE BOARD OF TRUSTEESEfficiency Maine Trust Fiscal Year 2013 Amended Budget

-- Statement of Revenues & Expenditures

59Efficiency Maine Trust Fiscal Year 2013 Amended Budget

-- Statement of Revenues & Expenditures

6061 

## APPENDIX D

REVENUES FROM SYSTEM BENEFIT CHARGE S

AND ALTERNATIVE COMPLIANCE MECHANISM62