# 17A-i APPENDIX 16A. REGULATORY IMPACT ANALYSIS SUPPORTING

MATERIAL

TABLE OF CONTENTS

17A.1 BACKGROUND ON MARKET PENETRATION CURVES DEVELOPED

BY XENERGY..............................................................................................................2

17A.2 UTILITY REBATE PROGRAMS FOR NEMA PREMIUM ELECTRIC

MOTORS.......................................................................................................................3

LIST OF TABLES

Table 17A.2.1 Rebate Programs for NEMA Premium Electric Motors ....................................5

LIST OF FIGURES

Figure 17A.1.1 Comparison of Exponential and Logis tic Curves Showing External and

Internal Influences on Consumers .....................................................................3

# 2 APPENDIX 16A. REGULATORY IMPACT ANALYSIS SUPPORTING MATERIAL

16A.1 BACKGROUND ON MARKET PENETR ATION CURVES DEVELOPED BY

XENERGY

Xenergy, Inc. developed a re-parameterized, mixed-source information diffusion model to

estimate market impacts induced by financial incen tives for energy-efficient appliances. The basic

premise of this mixed-source model is that in formation diffusion drives technology adoption.

There is extensive economic literature on the di ffusion process of new pr oducts as technologies

evolve. Some of the literature fo cuses primarily on the development of analytical models of diffusion

patterns of new products for individual consum ers or for technologies from competing firms. 1



# , 2



# , 3 

# One

study records researchers’ attempts to investigate underlying factor s that drive diffusion processes. 4



# Because of the distinct characte ristics of diverse new products, few studies have conclusively

developed a universally-applicable model. Some key findings, however, have seemed to gain wide

recognition in academia and industry.

First, new technologies may not be adopted by all potential user s, regardless of their economic

benefits and technological merits. Therefore, a ce iling on the adoption rate ex ists for many products.

Second, not all adopters purchase ne w products at the same time; some act earlier after the introduction

of a new product, while others re spond slowly, waiting for products to become more mature. Third,

diffusion processes can be approxima tely characterized by asymmetric S-curves, depicting three stages

of diffusion: starting, accelerat ing, and decreasing as the adop tion ceiling is being reached.

An important diffusion model, the epidemic model , is widely used in marketing and social

studies on diffusion. It assumes that a) consumers value the benefits of a new product identically and

b) the cost of a new product is constant or de clines monotonically over time. What induces a

consumer to purchase the new product is information about the availability a nd the benefits of the

product. In other words, it is information diffusion that drives new product adoption by individual

consumers. 3 

# The model incorporates information diffusi on from both internal sources (news spread by

word of mouth from early adopters) and extern al sources (the “announcement effect” by government,

other institutions, or commercial advertising) by supe rimposing a logistic func tion with an exponential

function. 1

, 4



# The relative degree of influence by internal or external sources determines the general shape of

the diffusion curve of a specific product. 1

, 4 

# For instance, if the adopti on of one particular product is

more influenced by external sources of informa tion diffusion (announcement e ffect) than by internal

sources (word of mouth among earlier adopters to pros pective adopters), the ra te of diffusion at the

beginning stage of the diffusion process is much hi gher. This reflects the immediate information

exposure to a significant number of prospective adopters brought about by external sources, in contrast

to the more gradual exposure to internal sources su ch as news propagation by earlier adopters, a small

proportion of the population, to other prospective adopters. Graphically speaking, a relatively

# dominant external source of information diffusion gives an immediate jump-sta rt to the adoption of a

new product in the first years, forming a concave cu rve with respect to the Y axis (see the exponential

curve in Figure A.1). Adoption of a new product w ith a stronger influence by internal sources of

information diffusion (such as a socially-tightened network formed by prospective adopters) may start

with a few early adopters and gradually increase as the number of adopters grows, and thus form a

convex curve (see the logistic curve in Figure 17A.1.1).

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

0 5 10 15 20 25 30



# YearMarket Penetration 

# Logistic Function Modified Exponential Function



# External Influence

Internal Influence



# Figur e 16A.1.1 Comparison of Exponential and Logi stic Curves Showing External and

Internal Influences on Consumers

16A.2 UTILITY RE BATE PROGRAMS FOR NEMA PREMIUM ELECTRIC MOTORS

Table 17A.2.1 presents a summary of rebate program amounts offered throughout the U.S. for

NEMA Premium three-digit frame seri es electric motors. Since ther e have not been rebate programs

for small electric motors, DOE studied rebate programs for larger motors as an analogous product.

3

# 4 DOE found 48 agencies with programs for 1 HP NEMA Premium electric motors.

Rebates for this product have been offered by electric utilities and municipal and regional

agencies. Table 17A.2.1 shows the agency na mes, States, rebate amounts, and program

websites. Multiple entries in the table indicate th at an agency offers two rebate amounts, one for

new motor purchases and one for replacements. The average rebate amount is a simple average

of the wide range of all of the agencies.5Table 16A.2.1Rebate Programs for NEMA Premium Electric MotorsUtility or AgencyStateNew 1 HPMotorAmountReplacement 1HP Amount (ifdifferent)WebsiteTuscon Electric PowerAZ$10http://www.tepcommercialenergysolutions.com/ProjectCenter/SRPAZ$30http://www.srpnet.com/energy/powerwise/business/standardrebate.aspxRiverside Public UtilitiesCA$35http://www.riversideca.gov/utilities/busi-efficientmotors.aspSouthern California EdisonCA$35http://www.sce.com/ExpressEfficiency/premium-efficiency-motors.htmSilicon Valley PowerCA$35http://www.siliconvalleypower.com/bus/?sub=rebatemotorConnecticut Municipal MotorUp(multiple utilities)CT$45http://www.grotonutilities.com/elec_conserv_comm_motor.asp (for example)Progress EnergyFL$5http://progress-energy.com/custservice/flabusiness/efficiency/efficiencyservices.aspTampa ElectricFL$2.50http://www.tampaelectric.com/business/saveenergy/energyefficientmotors/Hawaii ElectricHI$15http://www.heco.com/vcmcontent/StaticFiles/pdf/RebateSummarySheet010809.pdfAvistaID,WA$10https://www.avistautilities.com/business/rebates/washington_idaho/Pages/incentive_12.aspxRocky Mountain PowerID$45http://www.rockymountainpower.net/Navigation/Navigation82820.htmlAmeren IllinoisIL$7http://www.actonenergy.net/business-programs-motor-system-incentive.aspComEdIL$7http://www.comed.com/businesssavings/programsincentives/prescriptiveincentives/motors.htmMidAmerican EnergyIL$15 to $25http://www.midamericanenergy.com/html/energy6g_1.aspAlliantIA$25 to $30http://alliantenergy.com/UtilityServices/ForYourBusiness/ProductsServices/BusinessRewardsIncentives/IowaBusinessIncentivePrograms/015192Duke EnergyIN$10http://www.duke-energy.com/indiana-business/energy-management/motor-incentive.aspDuke EnergyKY$10http://www.duke-energy.com/kentucky-business/energy-management/motor-incentive.aspLinn County RECIA$20http://www.linncountyrec.com/cgi-script/csarticles/articles/000004/000428.htm?191Kansas City Power & LightKS, MO$50http://kcpl.programprocessing.com/content/prescriptiverebatesEfficiency MaineME$45http://www.efficiencymaine.com/business_programs_energywise.htmBaltimore Gas & ElectricMD$45http://conservation.bgesmartenergy.com/business/energy-solutions-business/motorsMassachusetts MotorUp (multipleutilities)MA$45http://www.nstar.com/business/energy_efficiency/electric_programs/construction_solutions.aspUnitilMA$75http://services.unitil.com/fge/bus_energy_efficiency_programs.asp?t=2Southern Minnesota MunicipalPower Agency (multiple utilities)MN$25$100http://www.smmpa.org/City of North St. PaulMN$5$16.50http://www.ci.north-saint-paul.mn.us/index.asp?Type=B_BASIC&SEC={F5C1E5FE-1ADD49AF-ACD8-59C3FB4192FF}Connexus EnergyMN$7.50$20http://www.connexusenergy.com/busrebates.htmDakota ElectricMN$10$20https://www.dakotaelectric.com/business/programs/rebates_grants_and_loans/adjustable_speed_drive_and_motor_rebatesCity of HutchinsonMN$15http://www.hutchinsonutilities.com/rebatecomm.htmlMinnesota PowerMN$5http://www.mnpower.com/powerofone/one_business/powergrant/rebates.htm6Utility or AgencyStateNew 1 HPMotorAmountReplacement 1HP Amount (ifdifferent)WebsiteMinnesota Valley ElectricCooperativeMN$7.50$20http://www.mvec.net/business/grants_rebates.aspStearns Electric AssociationMN$7.50$20http://www.stearnselectric.org/grantsbus.htmShakopee Public UtilitiesMN$20$100http://www.shakopeeutilities.com/commrebates.htmOtter Tail Power CompanyMN$20http://www.otpco.com/SaveEnergyMoney/commercialMotorsEEP_SD.aspPublic Service of New HampshireNH$45$75http://www.psnh.com/Business/Efficiency/default.aspNebraska Public Power DistrictNE$20http://www.nppd.com/energy_efficiency/energywise/business.aspNorthWestern EnergyMT$13http://www.northwesternenergy.com/display.aspx?Page=Motor_Rebate_MTEmpire District ElectricMO$50http://empire.programprocessing.com/content/HomeProgress EnergyNC$10http://www.progress-energy.com/custservice/carbusiness/efficiency/programs/eebiz/details.aspNYSERDANY$45http://www.nyserda.org/Programs/Existing_Facilities/default.htmlLong Island Power AuthorityNY$45http://www.lipower.org/efficiency/commercial.pre.htmlEnergy Trust of OregonOR$10http://www.energytrust.org/pe/manufacturing.htmlEugene Water & Electric BoardOR$20http://www.eweb.org/content.aspx/2e86bdb8-4143-499a-82b0-80cc676dd8c3Austin EnergyTX$15http://www.austinenergy.com/Energy%20Efficiency/Programs/Rebates/Commercial/Commercial%20Energy/motors.htmTacoma Public UtilitiesWA$15http://www.mytpu.org/customer-service/your-business/rebates-promotions/motor-driverebates.htmPuget Sound EnergyWA$8http://www.pse.com/solutions/forbusiness/pages/comRebates.aspx?tab=5&chapter=2Pacific PowerWA$45http://www.pacificpower.net/Navigation/Navigation71829.htmlFocus On EnergyWI$5http://www.focusonenergy.com/Incentives/Business/Motor.aspxCarbon Power & LightWY$13http://www.carbonpower.com/rebates.htmNumber of Agencies48Average Rebate Amount$26Websites last accessed June, 2009

# 7 REFERENCES

1 

# Geroski, P.A., Models of Technology Diffusion. 2000. Research Policy. 29, 603-625.

2 

# Hall, B. H. and B. Khan. “Adoption of New Technology.” 2003. Working Paper No.E03-

330. Department of Economics, Univer sity of California, Berkeley, CA.

3 

# Lekvall, P. and C. Wahlbin. “A Study of Some Assumptions Underlying Innovation

Diffusion Functions.” 1973. Sw edish Journal of Economics.

4 

# Van den Bulte, C. “Want to Know How Diffusion Speed Varies Across Countries and

Products? Try a Bass Model.” PDMA Visi on, October 2002. Product Development and

Management Association. XXVI No 4.