20110906CAPAI to PAC 1-50 Attach.pdf

Jean Jewell
From:
Sent:
To:
Cc:
Subject:
Attachments:
brad purdy (bmpurdy~hotmail.comi
Tuesday, September 06, 2011 3:45 PM
Daniel Solander; Ted Weston; Neil Price
Beverly Barker; Randy Lobb; Jean Jewell
Case PAC-E-11-13: CAPAI's 1st Discovery Requests to RMP
CAPAI1st Discovery Request to RMP.docx; Oakridge Labs-Schweitzer-Tonn Study.pdf
Attached, please find CAPAI's 1st Discovery Requests to Rocky Mountain in the above-referenced case. In addition, a
study referred to in Request No.4 and titled "Non-Energy Benefits from the Weatherization Assistance Program: A
Review of the Literatue" (Marin Schweitzer and Bruce Tonn: (Oak Ridge National Laboratory Report
ORNL/CON-484, April 2002), is also attached.
Given the importce, scope and complexity of the issues involved in this case, CAPAI intends to fie a motion
with the Commission by tomorrow seeking an extension of the Sept. 28 comment deadline for 14 days (Oct.
12). I have spoken with Daniel Solander who stated no objection to such an extension and am waiting to hear
back from Neil Price. I will delay fiing any motion until the end of the day in the event any par believes this
motion to be inadequate or inappropriate in any respect, in which case CAP AI is open to the possibilty of
amending the motion. Please contact me as soon as possible should this be the case.
Brad M. Purdy Attorney at Law
2019 N. 17th st.
Boise, ID 83702
208-384-1299 Land
208-484-9980 Cell
208-384-8511 Fax
bmpurdY\9hotmail.com ~ ;0-0 mI 0'" m
.":x
cac.\.
':
¡;
1
Ri:cr-¡,ir~'\ r- 'J t: t ",j ,'- r J~ ~ '",~. ...,;
Brad M. Purdy
Attorney at Law
BarNo. 3472
2019 N. 17th St.
Boise, ID. 83702
[phone] (Land)
[phone] (Fax)
bmpurdy(ßhotmail.com
ISB No. 3472
Attorney for Petitioner
Community Action Parnership
Association of Idaho
zon SEP -6 PH 3: 5'
IDfti.Jt¡tJi!LlTlts-
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
PACIFICORP DBA ROCKY MOUNTAIN )
POWER TO SUSPEND FUTURE PROGRAM )
EVALUATIONS OF SCHEDULE 21, LOW )
INCOME WEATHERIZATION SERVICES )
OPTIONAL FOR INCOME QUALIFYING )CUSTOMERS )
~CASE NO. E-l1-13
FIRST DISCOVERY REQUESTS
OF CAPAI TO ROCKY
MOUNTAIN POWER
The Community Action Parership Association ofIdaho (CAP AI), by and through its
attorney of record, Brad M. Purdy and, pursuant to Rule 225 of the Commission's Rules of
Procedure, IDAPA 31.01.01, requests that Rocky Mountain Power Company (Company; Rocky
Mountain) provide the following documents and information as soon as possible, but no later
than WEDNESDAY, SEPTEMBER 28, 2011. Pursuant to Rule 225(01) of the Commssion's
procedural rules, each discovery request below is to be sequentially numbered. Also pursuat to
Rule 225, as well as the Idaho Rules of Civil Procedure, some of the requests are production
requests, some are interrogatories, and others are requests for admission. Each request will be
identified as to its form.
This Discovery Request is to be considered as continuing, and Idaho Power Company is
requested to provide, by way of supplementary responses, additional documents that it or any
person acting on its behalf may later obtain that will augment the documents or information
produced.
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 1
Please provide answers to each question, supporting workpapers that provide detail or are
the source of information used in calculations, and the name, job title and telephone number of
the person preparng the documents. Please identify the name, job title, location and telephone
number of the record holder.
In addition to the written copies provided as response to the requests, please provide all
Excel and electronic files on CD with formulas activated.
Many, if not most, of the production requests contained herein refer to the "CADMUS"
study upon which the Company's Application in this case is based. Unless indicated otherwse,
references to page, section or line numbers refer to the CADMUS study.
Finally, all references to work performed by "CADMUS," please include the work of
"Quantec LLC" as well.
Request No.1: Interrogatories. Reference page 6 of CADMUS study. Given that
qualitative non-energy benefit questions were asked to only 22 paricipants, please explain
why Cadmus did not use a non-energy "adder" to account for non-energy benefits and
identify all states in which non-energy benefits have been accounted for in evaluating low-
income weatherization programs using a percentage adder?
Request No.2: Request for Production. Please identify and produce copies of all
evaluations where non-energy benefit adders have been used by Cadmus.
Request No.3: Request for Production. Please produce copies of all studies prepared by
Cadmus that explicitly use non-energy benefits in the calculation of a cost-benefit
determination.
Request No.4: Interrogatories. Reference p. 6 of CADMUS. Please indicate for each
"non-energy benefit" identified in the publication "Non-Energy Benefits from the
Weatherization Assistance Program: A Review of the Literatue" (Marin Schweitzer and
Bruce Tonn: (Oak Ridge National Laboratory Report ORNL/CON-484, April 2002), a copy
of which is attached hereto:
a. Whether the non-energy benefit was considered in the evaluation of the Rocky
Mountain Power program;
b. If not, please provide a detailed explanation of why not for each specific non-
energy benefit not considered;
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 2
c. Whether the non-energy benefit was quantified in the evaluation ofthe Rocky
Mountain Power program;
d. If not, please provide a detailed explanation of why not for each non-energy
benefit not quantified;
e. If the non-energy benefit identified was deemed to be non-quatifiable based on
the Rocky Mountain Power sureyor biling/payment data, was the non-energy
benefit given the quatification identified by Schweitzer and Tonn;
f. If not, provide a detailed explanation of why not for each non-energy benefit for
which the Schweitzer and Tonn quatification was not used.
Request No.5: Request for Admission. Reference pages 1 and 8 of CADMUS. Admit
that households weatherized under Rocky Mountain's LIWA program using Rocky Mountain
dollars involve homes whose primar heat source is electrc.
Request No.6: Request for production. If the foregoing request for admission is denied,
please produce the number of paricipants and nonparicipants respectively that were
electrically-heated and that were non-electrically heated homes using the Company's most
recent, accurate data.
Request No.7: Request for production. Reference pages 1 and 8 of CADMUS. If the
response to Request No.2 was anyting other than an unqualified confirmation, please
produce the following:
a. A restated Table 10 separately disaggregating electric heating and non-heating
homes;
b. A restated Table 11 separately disaggregating electric heating and non-heating
homes;
c. A restated Table 16 separately disaggregating electric heating and non-heating
homes;
d. A restated Figure 3 separately disaggregating electric heating and non-heating
homes;
e. A restated Table 17 separately disaggregating electric heating and non-heating
homes;
f. A restated Table 18 separately disaggregating electric heating and non-heating
homes;
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 3
g. A restated Table 21 separately disaggregating electric heating and non-heating
homes;
h. A restated Table 22 separately disaggregating electric heating and non-heating
homes;
1. A restated Table 23 separately disaggregating electric heating and non-heating
homes.
Request No.8: Interrogatory. Reference page 9 of CADMUS. Please explain in detail
the analysis done to determine the comparabilty of non-paricipants and paricipants based
on the Weatherization Assistance Program's prioritization of homes with elderly, young
children and handicapped.
Request No.9: Interrogatory. Reference p. 13 of CADMUS. Please explain in detail
how you accounted for the fact that income eligibilty for "energy assistance" in Idaho is set
at 60% of state median income while income eligibilty for weatherization assistance using
Rocky Mountan Power fuding is set at 150% of Federal Povert Level (page 9, note 7).
Request No. 10: Interrogatory. Reference page 13 of CADMUS. Please indicate whether
the "energy assistance" used to establish the non-paricipant population involved basic
LIHEAP cash grants, LIHEAP "crisis" grants or both. Separately indicate the number of
non-paricipants whose energy assistace grant used to qualify them for the non-paricipant
population was: (a) a basic LIHEAP cash grant; or (b) a LIHEAP crisis grant:
a. Of the 664 non-paricipants used in the consumption analysis;
b. Of the 1,429 non-paricipants used in the payment analysis.
Request No. 11: Interrogatory. Reference pages 13 and 16 of CADMUS. Please indicate
the number of nonparticipants used in the study who would not have been income-qualified
to receive weatherization assistace using Rocky Mountain Power funding:
a. For the usage study component;
b. For the payment study component.
Request No. 12: Interrogatory. Reference pages 14 CADMUS: Please indicate the
number of weatherized homes that did not have matching names and account numbers, but
were matched to utility records based on address and site:
a. Out of the 64 paricipants from 2007;
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 4
b. Out of the 89 paricipants from 2008;
c. Out of the 113 participants from 2009
d. Out of the 166 participants used in the usage analysis;
e. Out ofthe 664 non-paricipants used in the usage analysis.
Request No. 13. Request for Production. Reference page 14 CADMUS. Please provide
a restated Table 8 setting forth the number of paricipants by year used in the payment
analysis. Separately indicate the number of weatherized homes that did not have matching
names and account numbers, but were matched to utility records based on address and site;
a. Out of the number of paricipants from 2007;
b. Out of the number of paricipants from 2008;
c. Out of the number of paricipants from 2009
d. Out of the 229 paricipants used in the payment analysis;
e. Out of the 1,429 non-paricipants used in the payment analysis.
Request No. 14. Interrogatory. Reference page 14.
a. Out of the 113 paricipants from 2009, please distribute the number of units on
which weatherization was completed in 2009, by month of completion.
b. Of the 113 paricipants used in the final 166 paricipants used, please distribute
the number of units on which weatherization was completed in 2009 by month of
completion.
c. Of the 229 paricipants used in the payment analysis, please indicate the number
of participants on which weatherization was completed in 2009.
d. Of the number of units on which weatherization was completed in 2009 used in
the payment analysis, please distrbute the number of units on which
weatherization was completed in 2009 by the month of completion.
Request No. 15: Request for Production. Reference page 14 CADMUS. Please provide
a copy of all "anual reports" referenced "to determine average anual savings and
paricipant levels." Indicate specific page citations to the data used from such anual reports.
Request No. 16: Interrogatory. Reference page 16 of CADMUS. Please explain how,
given that weatherized homes were matched based on site identification and address and not
on specific accounts or customers, addresses could have:
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 5
a. Fewer than 10 months of pre-biling;
b. Fewer than 10 months of post-biling;
c. Fewer than 250 pre-biling days;
d. Fewer than 250 of post-biling days.
Request No. 17: Interrogatory. Reference page 16 CADMUS. Please define the term
"biling days" and separately indicate the number of biling days for a hypothetical customer
meeting the following conditions: (a) a biling period of June 1 through June 30; (b) a biling
date subsequent to June 30:
a. If the customer had no disconnection of service for nonpayment during the biling
period;
b. If the customer was disconnected for nonpayment on June 10 and reconnected on
June 15;
c. If the customer was disconnected for nonpayment on June 10 and reconnected
subsequent to July 1.
Request No. 18: Interrogatory. Reference page 16. Please indicate the number of the
original 266 paricipants who were excluded from the usage analysis because:
a. Fewer than 10 months of pre- and post-biling data were available;
b. Fewer than 250 biling days or more than 400 biling days in either the pre- or
post-period;
c. Total anual pre- or post-consumption of less than 1000 kWh; total anual pre- or
post- consumption more tha 50,000 kWh;
d. An account changing usage from the pre- to post-period by more than 70 percent.
e. More than one of the above.
Request No. 19: Interrogatory. Reference page 17: Please provide restated Tables 21 and
23 using the 1,308 savings:
a. Using the upper bound of the savings estimate (specifying the upper bound);
b. Using the lower bound ofthe savings estimate (specifying the lower bound).
Request No. 20: Interrogatory. Reference page 17.
a. Please provide the "relative precision at the 90 percent confidence level for the
arearage savings" (i.e., the arearage equivalent to the 26% for usage savings).
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 6
b. Please provide restated Tables 21 and 23 using the $31 arearage savings:
1. Using the upper bound of the arearage reduction estimate (specifying the
upper bound);
11. Using the lower bound of the arearage reduction estimate (specifying the
lower bound)
Request No. 21: Interrogatory. Reference page 18. Ofthe 13% of nonparicipants who
had their homes weatherized "solely with federal dollars," please provide a distribution of the
years in which those homes had been weatherized using only federal dollars.
Request No. 22: Interrogatory. Reference page 18.
a. Please provide a detailed explanation of how the "non-paricipant savings
estimate" was "adjusted" to account for homes previously weatherized solely with
federal dollars.
b. Please provide a detailed explanation of how the "non-paricipant usage" was
"adjusted upward to account for weatherized homes."
c. Please provide a detailed explanation of how the non-participant arearages were
adjusted to account for homes previously weatherized solely with federal dollars.
d. Please provide a detailed explanation of how the non-paricipant net shortfall was
adjusted to account for homes previously weatherized solely with federal dollars.
e. Please provide the calculation described in response to "a" through "d"
immediately above in a spreadsheet with all formulae intact.
Request No. 23: Request for Admission. Reference page 18. Please admit that the
Cadmus study finds that the impact of a 44% rate increase and the u.s. economic recession
would be less on the paricipation population than on the non-participant population (i.e.,
there is a typographical error on page 18, with the word "paricipating" in the last line of the
page intended to be "non-paricipating").
Request No. 24: Interrogatory. If the response to the preceding request for admission is
anything other than an unqualified confirmation, provide a detailed explanation of why the
44% rate increase and the economic recession would be more for the weatherized
paricipants than on the non-weatherized non-paricipants.
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 7
Request No. 26: Interrogatory. Reference page 18. Assuming that the savings impact of
the 44% rate increase and economic recession would be greater for the non-paricipant
population than for the paricipant population, please explain how the disproportionate
savings impact was removed for puroses of calculating net savings and program cost-
effectiveness.
Request No. 27: Interrogatory. Reference page 18. Assuming usage decreases occured
due to the impact of the 44% rate increase and economic recession, please compare the
persistence of those usage reductions to the persistence of the savings generated by the
weatherization measures installed through the program.
Request No. 28: Interrogatory. Reference page 18. Please provide a detailed explanation
of how differences in the persistence of savings attbutable to the 44% rate increase and
economic recession and the persistence of savings attbutable to program measures were
accounted for:
a. In the savings analysis;
b. In the payment analysis;
c. In the cost-benefit analysis.
Request No. 29: Interrogatory. Reference page 23. Please indicate the number of
overlaps between:
a. The 166 paricipant population used in the consumption analysis and the 229
paricipants used in the payment analysis.
b. The 664 non-paricipants used in the consumption analysis and the 1,429 non-
paricipants used in the payment analysis.
Request No. 30: Interrogatory. Reference page 23. Please provide a detailed explanation
of how paricipants or non-paricipants who were eliminated from the analysis due to usage
characteristics could be included in the payment analysis with resulting payment impacts
attributable to "program impacts."
Request No. 31: Interrogatory. Reference page 23. Referrng to Request No. 29, please
indicate the number of:
a. The 229 who were not also in the 166;
b. The 1,429 who were not also in the 664.
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 8
c. The 166 paricipants who would have been excluded had the screening tests on
page 23 been applied to them;
d. The 1,429 non-participants who would have been excluded had the screening tests
on page 23 been applied to them.
Request No. 32: Interrogatory. Reference page 24. Please indicate the amount of
"external payment" that was (a) basic LIHEAP cash grant money; (b) LIHEAP crisis grant
money; or (c) non-LIHEAP money, for:
a.The $226;
b.The $307;
c.The $110;
d.The $438.
Request No. 33: Interrogatory. Reference page 24. Please provide a detailed explanation
of:
a. Which numbers presented in Table 16 were used in the cost-benefit analysis
presented in Tables 21 and 23.
b. The maner in which the numbers identified in response to subsection "a" of
Request No. 32 were used in the cost-benefit analysis.
Request No. 34: Interrogatory. Reference Table 16. For each of the total biled amounts,
please indicate the amount attributable to monthly charges for curent usage (including, for
example, fixed monthly customer charges, consumption charges, riders, but excluding cash
security deposits, late payment charges, reconnect fees and customer service fees).
a. For each of the total biled amounts, please indicate the amount attributable to
monthy charges for curent usage (including, for example, fixed monthly
customer charges, consumption charges, riders, but excluding cash security
deposits, late payment charges, reconnect fees, and customer service fees).
b. For each ofthe customer payment amounts, please indicate the amount
attibutable to payment of monthly charges for curent usage (as defined
immediately above).
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 9
c. Provide a restatement of Table 16 excluding all Late Payment Charges and
miscellaneous customer service fees (including securty deposits) from both bils
and payments.
d. Provide a restatement of Figure 3 excluding all Late Payment Charges and
miscellaneous customer service fees (including cash security deposits) from both
bils and payments.
Request No. 35: Interrogatory. Reference Table 16. Provide a detailed explanation of
how the results in Table 16 were incorporated into the cost-benefit analysis.
Request No. 36: Reference Tables 16,21,23. Provide a detailed explanation of how the
following were incorporated into the cost-benefit analysis based on the results of Table 16:
a. Avoided credit and collection costs;
b. Avoided lost sales;
c. Avoided bad debt;
d. Avoided working capital;
e. Added revenue attbutable to redirecting credit and collection activities to
accounts with arears not reduced.
Request No. 37: Interrogatory. Reference Table 17. Provide a detailed explanation of
how the results in Table 17 were incorporated into the cost-benefit analysis.
Request No. 38: Interrogatory. Reference Tables 17,21 and 23. Provide a detailed
explanation of how the following were incorporated into the cost-benefit analysis based on
the results of Table 17:
a. Avoided credit and collection costs;
b. Avoided lost sales;
c. Avoided bad debt;
d. Avoided working capital;
e. Added revenue attrbutable to redirecting credit and collection activities to
accounts with arears not reduced.
Request No. 39: Interrogatory. Reference Tables 16, 17 and 18. Provide a restatement of
Tables 16, 17 and 18:
a. Using a paricipant population meeting the screen tests on both pages 16 and 23.
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 10
b. Using a nonparicipant population meeting the screen tests on both pages 16 and
23.
Request No. 40: Interrogatory. Reference: page 26 (Table 18). Provide a detailed
explanation of how:
a. Participant arears increased $54 (Table 18) when the net shortfall between bils
and payments increased $126 (Table 17);
b. Non-paricipant arears increased $104 (Table 18) when the net shortfall between
bils and payments increased $267.
Request No. 41: Interrogatory. Reference page 23. Please provide:
a. The number of the 229 paricipant accounts that had arears on their last biling of
the 2006 pre-period;
b. The number of the 1,429 non-paricipant accounts that had arears on their last
biling of the 2006 pre-period;
c. The aggregate arears of accounts having arears on the last biling of the 2006
pre-period from the 229 paricipant population;
d. The aggregate arears of accounts having arears on the last biling of the 2006
pre-period from the 1,429 non-paricipant population;
e. The number of the 229 paricipant accounts that had arears on their last biling of
the post-period;
f. The number of the 1,429 non-paricipant accounts that had arears on their last
biling of the post-period;
g. The aggregate arears of accounts having arears on the last biling of the post-
period from the 229 participant population;
h. The aggregate arears of accounts having arrears on the last biling ofthe post-
period from the 1,429 non-paricipant population.
Request No. 42: Interrogatory. Please reconcile the change in net shortfall in Table 16
with the change in arears in Table 18 and indicate why there are differences between the
change in arrears and the change in net shortfalL.
Request No. 43: Interrogatory. Reference: page 25. Please explain the process for
tallying the total number of disconnections for nonpayment when the paricipant and non-
paricipant populations:
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 11
a. Removed sites with fewer than 330 biling days in the measurement period;
b. Removed sites with fewer than 11 bils in the measurement period.
Request No. 44: Interrogatory. Reference page 26 (Table 18). Provide a detailed
explanation of how monthly credit balances (i.e., bil balances less than $0) were treated in
the examination of the "ending balance amount across the 12-month period." Were they
considered negatives or were they considered "O"s or something else.
Request No. 45 Interrogatory. Reference page 28. Please provide a detailed explanation
of how "the analysis used a weighted average measure life of25 years." Indicate each
number in Table 20 affected by this "weighted average measure life."
Request No. 46: Interrogatory. Reference page 28. Please reconcile the statement that
Table 20 used a "weighted average measure life of25 years" based on "frequency of
installations" with the statement at page 15 that the analysis "reflects the number of homes
that have received a specific tye of measure. . .rather than the total number of individual
measures installed through the program." In the reconciliation statement, specifically
address how the weighting occured in the absence of the number of individual measures
installed.
Request No. 47: Interrogatory. Reference page 29 (Table 22). Please provide a
spreadsheet with all formulae intact showing the derivation of the $8,331 "arearage" benefit.
Request No. 45: Interrogatory. Reference page 29 (Table 22).
a. Please indicate whether the $8,331 "arearage" benefit is a Year-l benefit.
b. Separately indicate how the arearage reductions over the "weighted average
measure life of 25 years" was calculated;
c. Separately indicate how the arearage reduction over the "weighted average
benefit life of25 years" was incorporated into the cost-benefit analysis.
Request No. 48: Interrogatory. Reference page 29 (Table 21). For each "cost" figure
presented in Table 21, please indicate the allocation of costs between:
a. Deparment of Energy Weatherization Assistance Program (W AP) fuding;
b. LIHEAP weatherization fuding;
c. Rocky Mountain Power Company weatherization fuding;
d. Paricipant fuding.
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 12
Request No. 49: Request for Production. Reference page 29 (Table 21). Please provide
all spreadsheets, with all formula intact, with showing the derivation of the "benefits" in
Table 21.
Request No. 50: Request for Production. Reference: page 29. Please provide a restated
Table removing Rocky Mountain Power fuding for health and safety measures from
program costs for:
a. Table 21
b. Table 23
DATED, this 6th day of September, 2011.
Brad M. Purdy
CAPAlS FIRST PRODUCTION REQUEST TO ROCKY MOUNTAIN 13
r~ r:""~i;,..
f'¡;_,~i
2m \ SEP -6 Pr'l 3: 51
ORNL/CON-484
NONENERGY BENEFITS FROM THE WEATHERIZATION ASSISTANCE
PROGRA: A SUMMARY OF FINDINGS FROM THE RECENT
LITERATURE
Martin Schweitzer
Bruce Tonn
OAK RIDGE NATIONAL LABORATORY
DOCUMENT AVAILABILITY
Reports produced after January 1, 1996, are generally available free via the U.S. Department
of Energy (DOE) Information Bridge.
Web site http://ww.ostLgov/bridge
Reports produced before January 1, 1996, may be purchased by members of the public from
the following source.
National Technical Information Service
5285 Port Royal Road
Springfield, VA 22161
Telephone [phone] (1-800-553-6847)
TDD 703-487-4639
Fax [phone]
E-mail info~ntis.fedworld.gov
Web site http://w.ntis.gov/supportordernowabout.htm
Reports are available to DOE employees, DOE contractors, Energy Technology Data
Exchange (ETDE) representatives, and International Nuclear Information System (INIS)
representatives from the following source.
Office of Scientific and Technical Information
P.O. Box 62
Oak Ridge, TN 37831
Telephone [phone]
Fax [phone]
E-mail reports~adonis.ostLgov
Web site http://ww.ostLgov/contact.html
This report was prepared as an account of work sponsored
by an agency of the United States Government. Neither the
United States Government nor any agency thereof, nor any of
their employees, makes any warranty, express or implied, or
assumes any legal liabilty or responsibility for the accuracy,
completeness, or usefulness of any information, apparatus,
product, or process disclosed, or represents that its use
would not infringe privately owned rights. Reference herein to
any specific commercial product, process, or service by trade
name, trademark, manufacturer, or otherwise, does not
necessarily constitute or imply its endorsement,
recommendation, or favoring by the United States
Government or any agency thereof. The views and opinions
of authors expressed herein do not necessarily state or
reflect those of the United States Government or any agency
thereof.
ORNL/CON-484
NONENERGY BENEFITS FROM THE WEATHERIZATION ASSISTANCE
PROGRA: A SUMMARY OF FINDINGS FROM THE RECENT LITERATURE
Martin Schweitzer, Bruce Tonn
OAK RIDGE NATIONAL LABORATORY
Date Published: April 2002
Prepared for
U. S. Departent of Energy
Office of Building Technology Assistance
Budget Activity Number EC 1701 000
Prepared by
OAK RIDGE NATIONAL LAB ORA TORY
Oak Ridge, Tennessee 37831
managed by
UT -BATTELLE, LLC
for the
u.S. DEPARTMENT OF ENERGY
under contract DE-AC05-000R22725
TABLE OF CONTENTS
EXECUTIVE SUMMARy.................................................... vii
1. INTRODUCTION .......................................................... 1
1.1 BACKGROUN .................................................... 1
1.2 METHODS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 SCOPE OF REPORT ................................................. 3
2. RA TEPA YER BENEFITS .................................................... 5
2.1 PAYMNT-RELATED BENEFITS .....................................6
2.2 SERVICE PROVISION BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3. BENEFITS TO HOUSEHOLDS .............................................. 11
3.1 AFFORDABLE HOUSING BENEFITS ................................. 12
3.2 SAFETY, HEALTH, AND COMFORT BENEFITS. . . ........... . . . ..... ..15
4. SOCIETAL BENEFITS ..................................................... 17
4.1 ENVIRONMENTAL BENEFITS ...................................... 17
4.2 SOCIAL BENEFITS ................................................ 20
4.3 ECONOMIC BENEFITS.............................................. 21
5. SUMMARY AND CONCLUSIONS ...........................................23
6. ACKNOWLEDGMENTS ...................................................27
7. REFERENCES............................................................ 29
iv
EXECUTIVE SUMMARY
The purpose of this project is to summarize findings reported in the recent literature on
nonenergy benefits attributable to the weatherizing of low income homes. This study is a
follow-up to the seminal research conducted on the nonenergy benefits attributable to the
Department of Energy's national Weatherization Assistance Program by Brown et aL. (1993).
For this review, nonenergy benefits were broken into three major categories: (1) ratepayer
benefits; (2) household benefits; and (3) societal benefits. The ratepayer benefits can be divided into
two main subcategories: payment-related benefits and service provision benefits. Similarly, there
are two key types of household benefits: those associated with affordable housing and those related
to safety, health, and comfort. Societal benefits can be classified as either environmental, social, or
economic.
Fig. E.S. 1 presents point estimates of the average lifetime moneta value per weatherized
home resulting from low income weatherization programs for the key benefit types listed above.
These benefits represent net present value estimates (i.e., estimates of the current
Point
Estimate
(2001 $ perparticipating
household:
Net Present
Value)
1200
1100
1000
900
800
700
600
500
400
300
200
100o. . . .~. ~. ~. ~.~~~ ~~ ~t: ~~l;~e ~e ~e ...o~ ~e it~ ~e ~oq,e ~ q,e ~~ q,e o~ q,e o~
e'" ~..9? e'" ..0 ~~ e ~ ~~,. Cì~~ ~e ~~,.(l ~o ~ ~o ~u
e'Q ai'- ~ .c." e ,.'l 'le 'l~~, '!.... ~(; ~u ~~,~ (l tl'l e"- ~o '!O ~o #C. '" ~e
~ev:'
e;'l
1123
ci. . ci.~~ ~ .~~. ~~e ~'l e~ ~ e ;.c.q,e ~e(: q,e(: 0¿"1 q,e(: o~
~~ 0(: ~~ C. ~~ 0(:¿,e 4.~ ¿,e ¿,e ~v
e;0 ~~ e;0 e;0
Fig. E.S.l Summary of Nonenergy Benefits by Category and Subcategory
vi
wort of all benefits expected over the lifetime of the weatherization measures), assuming
a 20-year lifetime for installed energy efficiency measures and a 3.2% discount rate. Overall,
societal benefits are estimated to be substantially larger than ratepayer and household benefits.
Ranges for the societal benefits are also much greater than for the other two categories of nonenergy
benefits. The total monetized value for all nonenergy benefit categories associated with
weatherizing a home is estimated to be $3346, in 2001 dollars. This represents a national average
which, like any point estimate, has considerable uncertainty associated with it. This figure is
substantially higher than the total value of nonenergy benefits presented a decade ago in the national
weatherization evaluation (Brown et aL. 1993) because the current study quantified a much broader
array of benefits than did the earlier work.
The net present value of $3 346 for all nonenergy benefits is slightly greater than the average
net present value of energy savings for houses heated by natural gas, which is $3174 in 2001 dollars.
In comparison, the average total cost per weatherization is $1779, also in 2001 dollars. The
"societal" benefit/cost ratio, which compares all benefits to all costs, is approximately 3.7. Low and
high values for the societal benefit/cost ratio, using low and high nonenergy benefit estimates, are
2.0 and 52.5, respectively. It should be noted that the total monetized nonenergy benefit estimate
is lower than it could be because the estimate does not contain some benefits that have not been
expressed in monetary terms.
vii
1. INTRODUCTION
1.1 BACKGROUND
The national Weatherization Assistance Program provides energy effciency improvements
for low-income residences throughout the country. The program is sponsored by the U.S.
Department of Energy and is implemented by state and local agencies in all 50 states and the District
of Columbia. Since its inception in 1976, the Weatherization Assistance Program has weatherized
approximately five milion dwellng units for their low-income occupants. Common weatherization
measures include: caulking and weather stripping around doors and windows and sealing other
unnecessary openings to reduce air infitration; installng attic, wall, and floor insulation; and
wrapping water heaters and pipes with insulating materiaL. A national evaluation of the program
conducted by Oak Ridge National Laboratory (ORN) almost a decade ago (Brown et al. 1993)
focused on energy and cost savings, but it also contained a detailed discussion of the nonenergy
benefits associated with low-income weatherization activities. Since the time of the national
evaluation, a substantial amount of research has been conducted to examine the nature and
magnitude of the non energy benefits that result from weatherization programs. The purpose ofthis
report is to use the findings from the large body ofpost-1993 research to update ORNL's previous
estimates of the Weatherization Assistance Program's nonenergy benefits.
ORN's national weatherization evaluation (Brown et al. 1993) identified an extensive range
of non energy benefits associated with the Weatherization Assistance Program. A total of fifteen
benefits were identified, but monetized values could be calculated for only about half of them. As
shown in Table 1, all the monetized values combined had a net present value, over the lifetime of
the weatherization measures installed, of $976 (in 1989 $).
1.2 METHODS
The primary research method used for this study was a comprehensive review of the
literature on nonenergy benefits written since the national weatherization evaluation was completed
in 1993. Many different articles and reports have been written about the nonenergy benefits oflow-
income weatherization activities since that time. Some present the findings from primary research
conducted on the subject, usually focusing on a weatherization program operated by a given state
or utility company (e.g., Magouirk 1995; Blasnik 1997; Hil et al. 1998). Others take a meta-
analysis approach and report the findings from a number of studies conducted in different locations
(e.g., Riggert et al. 1999; Riggert et al. 2000; Howat and Oppenheim 1999). One set of articles that
was especially useful for this study (Skumatz and Dickerson 1997; Skumatz and Dickerson 1998;
Skumatz and Dickerson 1999) focused on two
1
Nonenergy Benefit
Enhanced property value and extended lifetime of dwellng
Reduced fires
Table 1. Nonenergy Benefits Monetized in National Weatherization Evaluation (1993)
Net Present Value of Benefi
per Dwellng
(1989 $)
126
3
32Reduced arearages
Federal taxes generated from direct employment
Income generated from indirect employment
A voided costs of unemployment benefits
Total of all non energy benefis
55
506
82
in
$976
Environmental externalities
low- income weatherization programs operated by Pacific Gas and Electric Company (PG&E), using
primary data pertaining to those programs and also making use of importnt findings from a
comprehensive review of studies performed by other researchers elsewhere in the country. Because
much ofthe information analyzed by Skumatz and Dickerson came from a variety oflocations, and
because the PG&E programs they studied are very similar to other full-scale weatherization efforts
undertaken throughout the country, the findings from the Skumatz and Dickerson articles are
considered broadly applicable to DOE's Weatherization Assistance Program.
From a thorough review of the literature, we identified a complete set of non energy benefits
and organized them into major categories and subcategories. Our approach was informed by the
post-1993 articles and reports reviewed as well as by the ideas presented in the national
weatherization evaluation (Brown et aL. 1993). Then, a range of monetary values was identified for
each nonenergy benefit, drawing from all recent studies that provided dollar values for nonenergy
benefits and that employed methods that we considered reasonable and legitimate, even if the
numbers themselves appeared to be somewhat extreme. In fact, many of the value ranges presented
in this report are very broad.
After a range of monetized values was identified from the literature for all nonenergy
benefits, we used our professional judgment to select a reasonable point estimate for each one to
represent the average value of that benefit associated with weatherization efforts nationwide. Even
where the entire continuum of possible values was very large, it was common for most of the
suggested values to cluster around a fairly narrow range. In such cases, we tended to select a
preferred point estimate that was close to the midpoint of the clustered values. Where one extremely
high value led to an extended range, it was often the case that the clustered values and our point
estimate fell toward the low end of that range. However, it is important to note the inherent
uncertinty associated with any point estimate that is made. Clearly, a single point estimate for any
given nonenergy benefit cannot represent the benefits associated with every weatherization effort
in each separate locale because ofthe substantial variation that occurs among different programs and
2
geographic areas. Even where, as in this report, a point estimate is based on a number of different
studies and is intended to represent a national average, there is stil good reason to be cautious. As
the name implies, a point estimate is only an estimate of a savings value and is based on various
assumptions about program operations and effectiveness rather than on systematic measurement,
and subsequent weighting and averaging, of program outcomes throughout the country.
Nearly all of the nonenergy benefits addressed in this report occur everywhere, but a couple
only apply to certain types of households (i.e., those receiving low-income rate subsidies or those
using natural gas). In such cases, the magnitude of the benefits reported in the literature is adjusted
downward to make it an average value for the entire nation. Of course, even where benefits do apply
universally, the actual magnitude wil vary from place to place, as noted above. When point
estimates for all the benefits addressed in this report are aggregated, they represent the average
benefit for a typical low-income u.s. household. However, that point estimate wil not necessarily
apply to each individual household. In cases where a particular benefit does not apply, the total
value of all nonenergy benefits would tend to be lower than indicated in this report, provided that
all other conditions affecting the magnitude of benefits are typicaL.
Monetary values for the various nonenergy benefits provided in the recent articles and
reports that we reviewed are generally treated as ifthey are in 2001 dollars. We consider this to be
a reasonable approach because (l) most of the works reviewed were written during the last two or
three years and inflation has been very modest during that period, and (2) the dollar values provided
in the literature tend to be estimates and approximations and are not precise enough to warrant
adjustment by a few percentage points. The principal exception to this is in the case of values that
are taken from the national weatherization evaluation (Brown et al. 1993). Because the data in that
study date from 1989, it was considered prudent to adjust the relevant numbers upward, using the
inflation factors contained in the Consumer Price Index (Bureau of Labor Statistics 2001).
Many of the monetized values presented in the literature are listed in terms of dollars per
participating household per year. We converted those annual benefits into net present value (NV)
per household, assuming that: (1) the useful life ofthe installed weatherization measures is 20 years
(which is consistent with past evaluations of the Weatherization Assistance Program); and (2) the
appropriate discount rate is 3.2 % (the rate suggested by the Offce of Management and Budget for
program evaluation). Based on these assumptions, a benefit that has an annual value of$l 0 per year
would have a NPV of$146. We are aware that different parties are likely to apply different discount
rates when calculating the value of a given investment. However, the 3.2% discount rate is used in
this report for all categories of benefits to be consistent and to reflect the fact that this document is
written from the perspective of the federal agency that sponsors the Weatherization Assistance
Program.
1.3 SCOPE OF REPORT
The subsequent chapters of this report present key findings from our study of the nonenergy
benefits associated with low-income weatherization efforts. In order to present a complete picture
ofthe nonenergy benefits associated with weatherization programs, these benefits are described from
3
three distinct perspectives: that of utilty ratepayers; that of participating households; and that of
society as a whole. It should be noted that a couple of the nonenergy benefis addressed in this report
are discussed under more than one major category, to reflect the fact that there are different groups
of beneficiaries. For example, "avoided shut-offs and reconnections" are discussed both from the
ratepayer and the household perspective. The value of the benefit received by each set of actors in
different, and double-counting is avoided because ratepayers and participating households receive
different, and non-overlapping, values from the benefit in question.
Chapter 2 discusses the benefits received by utility companies and passed on to their
ratepayers. These fall under the broad headings of benefits related to the payments that utilties
receive from their customers and benefits related to the utilties' provision of services. In this
chapter, as in the following ones, each individual benefit is described, a range of possible monetized
values and a point estimate are given for each benefit, and a brief explanation is provided of the
methods used to calculate the values.
In Chapter 3, benefits experienced by the low-income households that receive weatherization
services are described. Such benefits can be grouped into two categories: affordable housing
benefits and benefits related to the occupants' safety, health, and comfort.
Chapter 4 addresses societal benefits, which can be subdivided into environmental benefits,
social benefits, and economic benefits.
Finally, Chapter 5 summarizes the full set of nonenergy benefits and their monetary values,
examines the relative magnitude of the different types of non energy benefits, and compares the size
of these benefits with the energy benefits generated by the Weatherization Assistance Program.
4
2. RATEPAYER BENEFITS
Utilty ratepayers receive two distinct types of nonenergy benefits as a result of
low-income weatherization efforts. Point estimates of the average lifetime monetary value
associated with each type of benefit are shown in Fig. 1. The first type of benefit is related to the
payments that utilties receive (or do not receive) from their customers and includes six different
items: (I) avoided rate subsidies; (2) lower bad debt write-off; (3) reduced carring cost on
arrearages; (4) fewer notices and customer calls; (5) fewer shut-offs and reconnections for
delinquency; and (6) reduced collection costs. The second type of benefit is related to the
provision of services and has three components: (1) fewer emergency gas service calls; (2)
transmission and distribution (T&D) loss reduction; and (3) insurance savings. While all of the
benefits listed above initially accrue to utilty companies, they tend to be passed on to the
utilties' customers and are therefore classified in this report as ratepayer benefits. Each of these
benefits is discussed in more detail below.
200
181
Point Estimate
(2001 $ per 100
participating
household:
Net Present
Value)
150
o
ø~~.f~ilLL0 ø
~'Ç ø~ø~ ~~
(l~
.o~.~~.:t?~~ ø"
(l..oø~ø ~~,c;
ø~Cj
Fig. 1. Average Lifetime Monetary Value of Ratepayer Benefits, by Type
5
2.1 PAYMENT-RELATED BENEFITS
Rate Subsidies Avoided
Many utilties provide lower, subsidized rates for their low-income customers.
Accordingly, each unit of energy consumed by low-income customers represents an expense for
the utilty and for its other customers, whose payments help subsidize the discount rate. When
the amount of energy used by low-income customers is reduced as a result of a weatherization
program, the number of subsidized units of energy sold decreases and the utilty and its other
ratepayers save money.
The literature reviewed for this study presented a number of different estimates of the
dollar value of rate subsidies avoided as a result oflow-income weatherization programs. Many
of these estimates were presented in terms of annual savings per household but, as explained in
Chapter 1, these were all converted to net present value over the lifetime of the measures
installed. The estimated lifetime savings range from a low of$38 to a high of $467. However,
the estimates of benefits found in the literature typically describe only those instances in which
rate subsidies are available and used by low-income customers. In order to represent average
savings across the nation as a whole, those savings numbers should be adjusted downward to
reflect the proportion of low-income customers actually receiving such subsidies. Based on
information compiled by the National Center for Appropriate Technology (2001), we know that
only about 15% oflow-income customers nationwide get rate subsidies. Accordingly, we
multiplied the range of benefits presented in the literature by 0.15, resulting in an adjusted range
of $6 to $70 (Table 2). Our preferred point estimate for this benefit is $21 but, as explained
previously, any single estimate made for the entire low-income Weatherization Assistance
Program is necessarily imprecise and the associated uncertinty must be recognized.
Table 2. Ratepayer Benefits: Payment-Related
Nonenergy Benefi
Rate subsidies avoided
Lower bad debt write-off
Reduced caring cost on
arearages
Fewer notices and customer
calls
Fewer shut-offs and
reconnections for delinquency
Reduced collection costs
Range of Benefits
(in 2001 $ per participating
household: Net Present Value)
6 -70
15-3462
4-110
Point Estimate of Benefits
(in 2001 $ per participating
household: Net Present Value)
21
89
57
0-23 6
2-15 8
Not Available Not Available
6
The point estimate of $21 suggested above is derived from the midpoint of the range of
possible dollar savings from avoided rate subsidies presented by Skumatz and Dickerson (1999)
for the Low-Income Weatherization Program operated by PG&E. The savings estimate was
calculated by taking the average rate subsidy received by participating households and
multiplying it by the amount (in percentage terms) by which participants' energy use is likely to
be reduced. We then adjusted this amount downward, as described above, to make it represent
the average savings distributed over all low-income customers and not just those receiving rate
discounts.
Lower Bad Debt Write-off
When customers cannot pay all or part of their bils for an extended period of time, the
utilty might have to write off the unpaid portion as bad debt. When the occupants of
weatherized units experience reductions in their utilty bils, they are better able to make their
payments and the amount of bad debt written off is likely to decrease. Actually, there are two
parts to this reduction in bad debt: a decrease in the average size of bad debt written off and a
decline in the number of such accounts.
The range of possible dollar benefits presented in the literature for lower bad debt write-
off was extremely broad, with a minimum NPV of $15 and a maximum of $3462 (Table 2).
Although one very high value was noted, all the other benefit levels described in the literature
clustered at the lower end of the range. We suggest a point estimate of $89, based on the
findings from a well-designed study of the nonenergy benefits resulting from Public Service
Company of Colorado's Energy $avings Parters Program (Magouirk 1995). That study
measured the post-weatherization reduction in the amount of bad debt written off by
participating households. In addition, the decrease in the number of accounts that were written
off was measured. The two factors combined yielded the $89 NPV reported above. That number
is near the high end of the range suggested by Skumatz and Dickerson (1999) for two California
low-income programs but at the low end ofthe range suggested in an extensive study of the
values of nonenergy benefits conducted for the state of California (TecMRKT Works et aL.
2001).
Reduced Carrying Cost on Arrearages
Weatherization programs lower energy consumption for participating customers, thereby
reducing the size of their energy bils and making it possible for them to pay a larger portion of
those bils. This in turn reduces the amount of customers' bils that are in arrears. As these
arrearages decline, the carring costs borne by utilties (i.e., the interest on the amount in
arrears) are also reduced.
According to the literature reviewed, the net present value of this benefit ranges from $4
to $110 (Table 2). As a point estimate, we chose $57, which is the midpoint of the savings
calculated by Skumatz and Dickerson (1999) for two low-income programs in California.
(PG&E's Low-Income Weatherization Program and its Venture Partners Pilot Program). The
Skumatz and Dickerson study calculated savings based on likely program-induced reductions in
7
arrearage balances, the magnitude of pre-weatherization arrearages in eligible households, and
prevailng interest rates.
Fewer Notices and Customer Calls
As noted above, households that receive weatherization services tend to lower their
energy consumption as a result, leading to lower energy bils, which are easier for them to pay.
Consequently, utilties are required to send out fewer notices in response to late payments and
wil receive fewer customer calls regarding these situations. All of this results in a savings to
utilties for staff time and materials.
As shown in Table 2, the NPV of this benefit reported in the literature ranges from $0 to
$23. Our suggested point estimate is $6, which is at the high end of the range suggested by
Skumatz and Dickerson (1999) but toward the lower end of the full range of benefits reported
when other studies are included. The monetized benefits reported here represent a combination
of the numbers calculated separately for late payment notices and for customer calls. An 18%
reduction in the number of notices and calls was assumed, based on previous empirical findings
on the incidence of reductions in the number of accounts written off for bad debt as a result of
weatherization efforts (Magouirk 1995). This was multiplied by the annual cost per household
of notices and customer calls to produce an estimate of savings per participant.
Fewer Shut-offs and Reconnections for Delinquency
As explained above, weatherized households are less likely to fall behind on their bil
payments, meaning that they are less likely to have their utilty service cut off for nonpayment.
Because utilties incur costs to disconnect customers and to reconnect those households in the
future, they experience a monetary savings as the result of customers being better able to pay
their bils and retain service.
The net present value of this benefit ranges from $2 to $15 (Table 2). As a point
estimate, we chose $8, which is the midpoint of the range of potential savings calculated by
Skumatz and Dickerson (1999) for two PG&E low-income programs. This value is also very
close to the benefits reported in several other studies of low-income weatherization efforts. The
savings reported here were estimated based on the weatherization-induced reduction in the
incidence of disconnections and the estimated costs of service shutoff and the portion of
reconnection costs not covered by the customer.
Reduced Collection Costs
If fewer customer payments are delinquent, utilties spend less time and resources trying
to collect what is owed them. However, it can be diffcult to separate these reduced collection
costs from the benefit associated with fewer late notices and customer calls, discussed above. A
few of the reports reviewed for this study estimated collection costs per incident but did not put
this in terms of the dollar value per all weatherized households. Because of the current lack of
reliable estimates for this benefit, we wil not attempt to assign it a monetary value.
8
2.2 SERVICE PROVISION BENEFITS
Fewer Emergency Gas Service Calls
As part of the home weatherization process, deteriorating or malfuctioning gas
appliances can be serviced or replaced and new connectors can be installed. This proactive
service reduces the subsequent need for utilties to make emergency service calls when
appliances or connectors break or malfunction. By avoiding these emergency calls, utilties save
staff time and resources, which constitutes a monetary benefit.
The literature reports that the NPV of this benefit ranges from $77 to $394. However,
because this benefit can only occur where houses are fueled by natural gas, the reported values
must be adjusted downward if they are to describe the nation as a whole. To reflect the fact that
50.9% of U.S. households are heated by natural gas (U.S. Energy Information Administration
2000), the numbers reported above were multiplied by 0.509, yielding an adjusted range of $39
to $201 for this benefit, as shown in Table 3. We suggest $101 as a reasonable point estimate.
This number is at the midpoint of the range of values reported by Skumatz and Dickerson (1999)
for two PG&E low-income programs and near the midpoint reported in the TecMRKT Works
(2001) study (after their adjustment to reflect natural gas usage). The range of numbers reported
in the Skumatz and Dickerson paper were calculated based on plausible ranges of service call
costs and weatherization-induced reductions in the incidence of such calls (which dropped from
27% of households before weatherization to only 7% afterward, according to Magouirk, 1995).
Nonenergy Benefit
Fewer emergency gas
service calls
T &D loss reduction
Table 3. Ratepayer Benefits: Service Provision
Range of Benefits Point Estimate of Benefis
(in 2001 $ per participating (in 2001 $ per participating
household: Net Present Value) household: Net Present Value)
39 - 201 101
Insurance savings
33-80
0-2
48
1
Transmission and Distribution Loss Reduction
As a natural consequence of transporting electric power along transmission and
distribution lines, a certin amount of energy is lost. These T &D losses are borne by the
responsible utilty and its customers. Because weatherization programs cause reductions in
household electricity use, they likewise reduce the amount of electricity that must be transported
and this results in a decrease in the T &D losses that occur. These savings often occur even in
dwellngs that are not electrically heated, because electricity usage for a number of purposes
(e.g., furnace fans and pumps, air conditioning, lighting) can be affected by home weatherization
measures.
9
The net present value ofT&D loss reductions reported in the literature range from $33 to
$88 (Table 3). Our suggested point estimate is $48, the midpoint of the possible benefit values
reported by Skumatz and Dickerson (1999) for PG&E's Low Income Weatherization and
Venture Partners Pilot Programs. The monetized value of the T&D losses reported here were
calculated by multiplying the percentage of power that is typically lost through transmission and
distribution (approximately 10%) by the avoided cost of power.
Insurance Savings
To the extent that the services performed by weatherization programs include the fixing
of gas leaks and the repair or replacement of faulty appliances, the result is likely to be a
reduction in the risk of household explosions and fires. This, in tum, would tend to lower the
utilty's insurance costs. Such cost savings are expected to occur whether the utilty is self-
insuring or buys coverage from another company.
The net present value of this benefit ranges from $0 to $2 (Table 3). As a point estimate,
we chose $1, which is the midpoint of this range of potential savings values. The savings in
insurance expenses reported here were estimated based on the magnitude of claims made in a
typical year and the risk reduction associated with weatherization efforts. Skumatz and
Dickerson (1999) assumed that the reduction in claims would fall by roughly the same factor that
gas emergency calls would be reduced, as reported by Magouirk (1995).
10
3. BENEFITS TO HOUSEHOLDS
Low-income households that participate in weatherization programs are the recipients of
two different types of nonenergy benefits. Point estimates of the average lifetime value of each
are provided in Fig. 2. First, there are benefits that relate in some way to the affordabilty of
low-income housing. These include: (1) water and sewer savings; (2) property value benefits;
(3) avoided shut-offs and reconnections; (4) reduced mobility; and (5) reduced transaction costs.
The other type of household benefit concerns the safety, health, and comfort of residents and has
three components: (1) fewer fires; (2) fewer ilnesses; and (3) improved comfort and related
factors. Each of these household benefits is discussed in its own section, below.
Point
Estimate
(2001 $ per
participating
household:
Net Present
Value)
800
700
600
500
400
300
200
100
o
783
123
i~~
-l0 ~0~0 ~0
~~
tlo~~
~~'l~l:~~0
v:0'l~0
~0~'kO'C
t?'l(p~
Fig. 2. Average Lifetime Monetary Value of Household Benefits, by Type
11
3.1 AFFORDABLE HOUSING BENEFITS
Water and Sewer Savings
Many of the homes serviced by a weatherization program receive low-flow showerhead
and faucet aerator retrofits as part of the package of energy-effciency measures installed. In
addition to saving energy, these measures result in reduced household water use. Accordingly,
households receiving these services save money on their water bils and, because sewer charges
are generally based on the amount of water consumption, on their sewer bils as well.
A number of different estimates of the magnitude of water and sewer savings was
presented in the literature reviewed for this study. Although most of those estimates were
presented in terms of annual savings per household, they are presented here in terms of their net
present value over the lifetime of the measures installed. The NPV of these savings ranges from
$62 to $1607 (Table 4). Our best current estimate for this benefit is $271 but, as explained
previously, there is substantial uncertinty associated with any point estimate made for the entire
low-income Weatherization Assistance Program.
Table 4. Household Benefits: Affordable Housing
Nonenergy Benefit
Water and sewer savings
Propert value benefits t
Avoided shut-offs and
reconnections
Range of Benefits
(in 2001 $ per partcipating
household: Net Present Value)
62-1607
0-5413
0-52
Point Estimate of Benefits
(in 2001 $ per participating
household: Net Present Value)
271
180
17
Reduced mobilty 0-1460
Reduced transaction costs 0-131
t occurs one time only in year weatherization is performed
278
37
The point estimate of$271 suggested above is based on information provided by
Skumatz (2001) on average annual water savings per participating household resulting from the
installation of faucet aerators and low-flow showerheads. This average household savings
number was multiplied by the mean cost per gallon of water nationwide (U.S. Environmental
Protection Agency 1997). The resulting number was updated to 2001 dollars using the multiplier
suggested by the Consumer Price Index (Bureau of Labor Statistics 2001).
Propert Value Benefits
In many cases, weatherization programs make some strctural repairs and improvements
to the houses they service in addition to installng energy effciency measures. The strctural
improvements that are provided typically increase the propert value of the homes receiving
12
them. This represents a monetary benefit for the affected households that goes beyond the dollar
savings associated with the energy effciency improvements that are made. In addition,
structural repairs can extend the useful lifetime of the affected dwellngs and preserve the
existing stock of affordable low-income housing.
According to the literature reviewed, the propert value increase associated with home
weatherization ranges from a minimum net present value of $0 to a maximum of $5413 (Table
4). Although one document (Riggert et a1. 1999) suggests using the high value shown at the top
of the range, all the other articles and reports reviewed for this study present values that cluster
around the lower end of the scale. Those lower values are typically based on the assumption that
the propert value increase is equal to the cost of strctural repairs made to the home in question.
We suggest a point estimate of $180 for this benefit, based on the findings of the national
weatherization evaluation (Brown et a1. 1993). That study found that, in 1989, the average
amount spent on materials for structural repairs nationally was $126. By adjusting that figure to
2001 dollars using the multiplier of 1.428 suggested by the Consumer Price Index (Bureau of
Labor Statistics 2001), we get the $180 noted above.
Avoided Shut-offs and Reconnections
As explained in Chapter 2, weatherization programs result in decreased energy
consumption for the homes serviced and this, in tum, means lower energy bils. Accordingly,
weatherized households are less likely to fall behind on their bil payments and are less likely to
have their utilty service shut off for nonpayment. By avoiding service terminations, low-income
customers experience a two-fold benefit. First, they get to retain the full use of their dwellng
unit, the value of which is equivalent to the rent that would be "lost" if it were paid for a house
(or portion of a house) that was unusable due to the lack of utility service. Also, the affected
customers avoid having to pay a subsequent restart fee. While some authors include the
perceived "value of service" experienced by the customer (i.e, how much it is worth to the
customer to avoid a service disruption) as an additional benefit, this measure is not included here
because of the diffculty of objectively assigning a dollar value to it.
The values for avoided shut-offs and reconnections presented in the literature range from
$0 to $52 (Table 4). These numbers exclude the "value of service" benefit described in some
studies, as noted above. A reasonable point estimate for this benefit is $17, which represents the
upper end of the range given by Skumatz and Dickerson (1999) for lost rental value and cost to
restart in their study of PG&E's Venture Partners Pilot Program. This value is considered
reasonable to use here because a newer study (TecMRKT works et a1. 2001) suggests a
somewhat higher value for this benefit, putting the $ 1 7 figure roughly in the middle of the full
range. Skumatz and Dickerson calculated lost rental value based on the likely reduction in
termination rates and the assumed rent for a housing unit over a limited shut-off period. The cost
to restart service was based on the projected reduction in termination rates and the restart costs
per household, which include a reconnection fee and the value of lost work time.
13
Reduced Mobility
When household energy costs are high, less money is available for other purposes,
including paying rent or making mortgage payments. This can be especially diffcult for
low-income households, where funds are very limited. In some cases, high energy costs can lead
occupants to voluntarily move out of their current dwellng in favor of one with lower energy
bils. In other instances, households with insuffcient funds to cover all their expenses can be
evicted for a failure to make housing payments or can be forced to move after utilty service is
discontinued. While the freedom to choose to be mobile is generally considered desirable, the
mobilty discussed here is associated with economic hardship and a lack of options. This kind of
mobilty, which is characterized by frequent and unwanted moves, can have the side effect of
increasing school drop-out rates in the affected households. In tum, this can lead to a lifetime of
lower earnings for those who prematurely terminate their education. By lowering household
energy bils, weatherization programs can reduce mobilty, thereby preventing some youth from
dropping out of school and increasing their earning potentiaL. That increase in earnings is a
monetary benefit of weatherization that can be quantified.
The values for reduced mobilty presented in the literatue range from $0 to $1,460
(Table 4). Our suggested point estimate for this benefit is $278, which is the average of the
point estimates presented by Skumatz (2001) for two different low-income weatherization
programs. Skumatz calculated the value of reduced mobilty based on: (1) the estimated effect
of weatherization efforts on reducing the school drop-out rate; and (2) the estimated difference in
lifetime earnings between high school graduates and drop-outs.
Reduced Transaction Costs
If they were not served by a weatherization program, some low-income households might
choose to install certain energy-efficiency measures on their own. However, to do so, they
would first have to become familar with the needed retrofit measures and locate the necessary
materials. The time and effort required for that represent a set of "transaction costs" for
low-income households, and avoiding those transaction costs amounts to a benefit for those
receiving weatherization services. By assigning a monetary value (approximating minimum
wage) to the time saved by participants, the magnitude of transaction costs can be identified.
As shown in Table 4, the net present value of reduced transaction costs reported in the
literature range from $0 to $131. Our suggested point estimate is $37, the midpoint of the
possible benefit values reported by Skumatz and Dickerson (1999) for PG&E's Low Income
Weatherization and Venture Parters Pilot Programs. The reduced transaction costs reported
here were calculated based on the number of compact fluorescent lamps installed per household
under the programs studied and the estimated reduced transaction costs per bulb. That
monetized benefit was then doubled to reflect the fact that weatherization programs include
many more measures than compact fluorescent bulbs alone. The resulting value seems
conservative in light of the fact that home weatherization involves the installation of a number of
different products (e.g., insulation, sealants, low-flow showerheads, storm windows,
14
programmable thermostats) which consumers would have to locate and learn about if they were
to perform the work themselves.
3.2 SAFETY, HEALTH, AND COMFORT BENEFITS
Fewer Fires
Many low-income homes have old and poorly-maintained space and water heating
systems. These present a risk of fire resulting from gas leaks. Also, low-income households
sometimes use dangerous supplemental heat sources like gas grils or electric space heaters, and
this is especially problematic in those instances where the primary heating source is
disconnected due to nonpayment. Weatherization programs can improve the operation of space
and water heating systems and reduce the need for supplemental heating. As a result, fewer fires
occur in weatherized homes, and this represents a real benefit to the affected households.
The net present value of fewer fires reported in the literature ranges from $0 to $555
(Table 5). We suggest using $68 as a point estimate for this benefit. This value of fewer fires
over the lifetime of the weatherization measures installed is based on the anual per household
value for this benefit presented by Brown et aL. (1993) in the national weatherization evaluation,
adjusted to 2001 dollars using the multiplier suggested by the Consumer Price Index (Bureau of
Labor Statistics 2001). The study by Brown et aL. estimated the number of fires prevented by
the national Weatherization Assistance Program, using national statistics on the occurrence of
fires and fire death rates, and attributed a value to the associated propert damage and deaths
based on residential fire-loss statistics and the projected value offuture lifetimt earnings.
Table 5. Household Benefits: Safety, Health, and Comfort
Nonenergy Benefi
Fewer fires
Fewer ilnesses
Improved comfort and
related factors
Range of Benefits
(in 2001 $ per participating
household: Net Present Value)
0-555
0-2191
Point Estimate of Benefis
(in 2001 $ per participating
household: Net Present Value)
68
55
Not Available Not Available
Fewer Illnesses
Some authors have suggested that people living in houses with sufficient and continuous
heat during the colder months of the year are likely to get fewer colds. When adults get fewer
colds, it means that they experience fewer lost days of work and the accompanying loss of
wages. In addition, when children are sick, a parent or guardian often has to miss work to care
for them, again at the cost oflost wages. Accordingly, weatherization improvements that result
in warmer and less draft homes could lead to fewer ilnesses and the monetary benefits that go
15
along with that. It should be noted that tightening up homes could lead to increases in indoor air
pollution and associated ilnesses. However, properly conducted energy audits allow for
adequate air changes in the home to minimize this risk.
The net present values reported in the literature for fewer ilnesses range from a low of $0
to a high of$219L. We suggest a point estimate of$55. This value was calculated using the
method described in Skumatz (2001). Skumatz developed a point estimate for the benefit of
fewer ilnesses associated with low-income weatherization efforts, based on survey findings
regarding the number of lost workdays avoided and an assumed average wage earned by the
affected workers.
Improved Comfort and Related Factors
Because houses tend to become warmer and less draft after they are weatherized, their
occupants are likely to experience increased comfort levels. In addition, the improvements
made to homes during the weatherization process often make them less noisy and can improve
their appearance. All of these represent benefits that are real but are very difficult to measure
objectively. Some innovative work has been performed in this area, most notably in the form of
survey research that asks respondents to characterize the value of various nonenergy benefits
relative to the energy savings that they have received as a result of program participation
(Skumatz et aL. 2000). However, it is not clear whether the values calculated by such
approaches, which assign a dollar value to a given benefit based on its perceived importnce to
the recipient, are either valid or reliable given the very hypothetical nature of the task set to the
respondents. Accordingly, we wil not attempt to assign a dollar value to comfort, noise, and
aesthetic benefits at this time.
Improved indoor air quality is another benefit associated with weatherization programs.
Faulty furnaces can release carbon monoxide into houses, with very negative health effects.
Improvements to heating equipment made during the weatherization process can prevent such
releases, and the installation of carbon monoxide monitors can alert household occupants to the
presence of this dangerous gas. Despite its importance, we wil not attempt to assign a monetary
value to the benefit of improved indoor air quality because of the current lack of reliable
estimates.
Weatherization providers are required to give a booklet on the hazards of lead-based
paint (U.S. Environmental Protection Agency 2001) to households in which such paint could be
present. This booklet presents information on the dangers of lead poisoning and how they can be
reduced or eliminated. Because lead can have very adverse impacts on those exposed to
it-especially children-educational efforts like the one described above can have the positive
effect of protecting the health of household residents. Due to a lack of information on the
monetar value of this benefit, we do not attempt to quantify its worth.
16
4.0 SOCIETAL BENEFITS
Following the literature, the societal nonenergy benefits attributable to weatherizing low
income homes are broken into three categories: environmental, social and economic. Fig. 3 gives
point estimates of the average lifetime monetary value associated with each of the three benefit
types. The findings distiled from the literature are reported in sub-sections 4.1, 4.2, and 4.3,
respectively.
Point
Estimate
(2001 $ per
participating
household:
Net Present
Value)
1200
1100
1000
900
800
700
600
500
400
300
200
100
o
1123
~~"'~0~~t:
~'r:0~~O~tl
~:l;~
~t:
r:tl~0
~(,
o~o~~(J
tusing natural gas estimates for air emissions
~il
r:0~tl
~~~o
Fig. 3. Average Lifetime Monetary Value of Societal Benefits, by Type
4.1 ENVIRONMENTAL BENEFITS
Environmental benefits pertin to how the environment can be improved by weatherizing
low income homes. The most frequently studied environmental benefits arise from the reduction
of air pollutants due to the reduction in the burning of fossil fuels, either in the home (e.g.,
natural gas) or at central power stations to produce electricity. Other categories of environmental
benefits quantified in the literature include less impingements upon fish around power plant
water sources, and reduced water use and, subsequently, less sewage. Table 6 provides ranges
and point estimates for these environmental benefits.
17
Nonenergy Benefit
Air Emissions - Natural Gas
Carbon (C02)
Sulfur Oxides (SOx)
Nitrogen Oxides (NOJ
Carbon Monoxide (CO)
Methane (CH4)
Particulate Matter (PM)
Subtotal
Air Emissions - Electricity
Carbon (C02)
Sulfur Oxides (SOJ
Nitrogen Oxides (NOJ
Carbon Monoxide (CO)
Methane (CH4)
Particulate Matter (PM)
Subtotal
Other Benefits
Heavy Metals (air emissions)
Fish Impingement
Waste Water and Sewage
Subtotal
Table 6. Environmental Benefits
Range of Benefits (in 2001 $
per participating
household: Net Present
Value)
40 - 32,189
.02 - 6015
.02 - 2254
.21 - 758
.07 - 269
.01 - 6983
40 - 49,176
167 - 97,857
31 - 40,872
11 - 17,290
36 - 81
.68 - 1.15
.27 -704
246 - 156,805
1.39 - 17,205
23.44 - 23.44
3.36 - 657
28 - 17,885
Point Estimate of Benefits
(in 2001 $ per participating
household: Net Present
Value)
102
23
48
46
92
9
320
305
92
523
39
.91
14
974
380
23.44
146
549
Totait 68 - 67,061
t uses natural gas estimates for air emissions
18
869
With respect to air emissions, the literature contains a wide range of estimates for several
factors that are needed to estimate benefits. These factors include (1) the number of pounds of
pollutants emitted per unit of energy service delivered (e.g., Ibs/ mmbtu), (2) average energy
savings per weatherized home, (3) reductions in pounds of pollutants emitted per weatherization,
and (4) value in dollars associated with reducing units of air pollutants (e.g., $/ton of carbon
dioxide emissions reduced). The approach followed to estimate the range of benefits was to take
the lowest (highest) value for each factor to calculate the lower (upper) bound. The approach
taken to develop a point estimate varied by each type of air emission. In general, mid-range and
frequently mentioned estimates were used. Sources used for the environmental benefit review
include: Brown et a1. (1993), Berr (1997), Skumatz and Dickerson (1997, 1999), Skumatz
(2000), Riggert et a1. (1999), Riggert et a1. (2000), Hil et a1. (1999), Burtaw et a1. (1997),
Burtraw and Toman (1997), TecMRKT Works et a1. (2001), Biewald et a1. (1995), and National
Research Council (2001).
The ranges in benefits associated with reducing air emissions are large and arise due to a
host of methodological issues. Two key problems are related to choice of benefit estimation
method and where studies had been conducted. The former problem is particularly acute with
respect to valuing emission reductions. Generally, one of two methodological approaches is
taken. One approach is to value emission reductions equal to the value of emission permits that
are being traded in an emissions market (or the expected value for such permits if the market
does not yet exist). This value approximates the cost faced by emitters for complying with
emission reduction regulations. These values are attractive for benefit estimation exercises
because they can be documented, if the market exists, or closely estimated, if the market does not
yet exist.
The market valuation method tends to yield lower values for emission reductions than the
second method, which calls for a comprehensive estimation of the benefits associated with
emission reductions. In other words, a drawback to using the market values of emissions permits
is that these values do not directly encompass important benefits accruable to society from the
emissions reductions. For example, the market values do not reflect improvements to human
health and ecosystems or decreasing rates of deterioration of the exterior of buildings and other
materials exposed to the pollutants. Estimating all these benefits can lead to dramatically higher
values for reducing harmful emissions to the air. The large ranges in benefits shown in Table 6
are mostly attributable to studies that adopted one or the other of the two methodologies. It must
be noted that adopting a comprehensive benefits estimation methodology also increases the
uncertainty in the valuation process because estimating health and ecosystem benefits is
extraordinarily diffcult. Because each method has significant strengths and weakness, neither
has been universally accepted and wide ranges of benefits estimation can be expected to continue
into the foreseeable future. In this study, we tended to favor the market valuation approach when
generating point estimates of environmental benefits.
Where studies have been done is a second source of variation in the numbers presented in
Table 6. This is because spatial factors can greatly impact the reductions in emissions per
weatherized home. It is well known that the number of heating degree days, which vary across
the country, is tightly correlated with energy savings and, ultimately, with air emission
19
reductions due to weatherization. Thus, findings by studies done in California wil be different
from studies done in Vermont; both may not be generalizable to the entire country but a value
somewhere in the range probably is. Cooling degree days also vary by climate zone but these
savings are usually not included in energy savings estimates, and, conversely, not in air emission
reduction estimates.
Fuel used for heating also varies across the countr. Studies conducted in areas
dominated by natural gas are different than studies done in areas more reliant on electricity.
What types of fuels are used to generate electricity are also important, as coal types vary
considerably and coal is considerably different from natural gas, for example. Generally,
emission reduction estimates do not encompass homes that use multiple fuels for heating (e.g.,
electricity and wood are common in the Pacific Northwest). Impacts upon other energy end uses,
such as air conditioning, are also not incorporated in these analyses. Studies done in limited
market areas with unique fuel mixes and climate yield large ranges in results and this is also
indicated in the ranges exhibited in Table 6.
It should also be noted that the environmental benefits listed in Table 6 are not
comprehensive. Categories of environmental benefits not apparently quantified in the literature
include reductions in water pollution (e.g., from run-offs from power plant sites, leaching of
toxics into the groundwater from mining operations), land use changes (e.g., associated with
extraction of natural resources), and solid waste (e.g., fly-ash from electric generation plants).
The literature also does not include complete life cycle assessments that would encompass all
pollutants associated with each phase of a home heating fuel (i.e., from extraction of raw
materials to materials processing to consumption of the fuel to waste disposal issues) to allow
comparison with the environmental implications associated with materials used to weatherize
homes (e.g., assessing the life cycle emissions -- extraction, processing, manufacturing,
transportation, use, and end-of-life disposal of insulation). For example, not included in this
analysis are environmental costs associated with the production of fiber glass insulation, epoxy-
based window caulking, double-pane windows, and other measures commonly installed in
weatherized homes.
4.2 SOCIAL BENEFITS
Social benefits represent a catch-all category of benefits attibutable to weatherization
that are clearly not environmental or economic. In this sub-section we wil focus on one such
benefit that is discussed in the literature and for which the effects have been monetized: avoided
unemployment benefits. This refers to the employment of people in the course of weatherizing
homes who would have been unemployed otherwise. Sources for these benefits include Brown et
aL. (1993), Skumatz and Dickerson (1999), and Riggert et aL. (1999). Other social benefits which
have not been monetized include: social equity (Berr et aL. 1997, National Consumer Law
Center 1999), and improvement in community pride through improvement in the local housing
stock.
20
The range for avoided unemployment benefits (Table 7) was developed by using the low
and high estimates found in the literature. To establish a point estimate, the value reported by
Brown et aL. (1993) was adjusted to 2001 dollars based on the Consumer Price Index (Bureau of
Labor Statistics 2001). Factors that impact the reliabilty of estimated benefits include the
availability of jobs in various areas of the countr and over time. In areas having numerous job
opportunities, it is harder to argue that there are avoided unemployment benefits. However, since
low income weatherizations are often conducted in economically distressed communities that
typically do not benefit from national or even regional upturns in the economy, it can be more
strongly argued that avoided unemployment benefits are valid.
Table 7. Social Benefits
Nonenergy Benefit
Range of Benefits (in 2001 $
per participating
household: Net Present
Value)
0-183
Point Estimate of Benefits
(in 2001 $ per participating
household: Net Present
Value)
117Avoided
Unemployment
Benefitst
t occurs one time only in year weatherization is performed
4.3 ECONOMIC BENEFITS
Weatherizing low income homes can yield a variety of economic benefits. One group of
benefits is related to spending money on weatherization. These expenditures can directly result
in new jobs and increases in personal income which can translate into increases in federal
income tax collections. Additionally, weatherization expenditures can impact the local economy
as a portion of every dollar prevented from leaving the community to import energy is spent
within the community. This is known as the multiplier effect. Most studies only focus on the
impacts within economically distressed areas and do not address the broader economy, where
jobs and incomes may be lost, for example in energy production and distribution operations.
Given the scale and scope of the energy production and distribution industries and the fact that
energy consumption has continued to increase over time, it is highly unlikely that any job losses
in those industries can be attributed to weatherization activities.
Of course, saving energy has national security implications, too, by reducing the need for
energy imports. Lastly, it has been hypothesized that owners of rental units may benefit from the
weatherization of rental units if the low income households save enough money on energy bils
to better be able to pay their monthly rents.
Table 8 contains ranges and estimates for the economic-related factors listed above.
Sources for these estimates include the Weatherization Network (1999), Nevin et aL. (1998),
Brown et aL. (1993), TecMRKT Works et aL. (2001), Riggert et aL. (1999), Skumatz and
21
Dickerson (1997), Skumatz (2001 and 1998), Berr et aL. (1997), Hil et aL. (1998), RPM
Systems (1995), Galvin (1999), National Research Council (2001), and Offce of Transportation
Technology (2001). Table 8 indicates that the direct and indirect economic benefits of low
income weatherization programs can be quite significant.
Table 8. Economic Benefits
Nonenergy Benefit
Range of Benefits (in 2001 $
per participating
household: Net Present
Value)
115 - 4354
Point Estimate of Benefits
(in 2001 $ per participating
household: Net Present
Value)
801Direct and Indirect
Employmentt
Lost Rental 0-2.19
75 - 3286
1.14
321National Security
Total 190 - 7642 1123
t occurs one time only in year weatherization is performed
Numerous factors impact the validity of the estimates contained in Table 8. As discussed
above, the availabilty of jobs in an area impacts the job creation and increased federal benefits.
The degree to which a local economy is sheltered from needing to import goods and services wil
impact the local multiplier effect, and housing availabilty wil impact the lost rental benefit.
22
5. SUMMAY AND CONCLUSIONS
Table 9 summarizes the results of the literature review presented in the preceding three
chapters. Overall, societal benefits are estimated to be substantially larger than ratepayer and
household benefits. Ranges for the societal benefits are also much greater than for the other two
categories of nonenergy benefits. The total point estimate for nonenergy benefits in all categories
associated with weatherizing a home is $3346, in 2001 dollars. As explained in Chapter 1, this
represents a national average figure which, like any point estimate, has substantial uncertainty
Nonenergy Benefit
Category/Subcategory
Ratepayer Benefits
Payment-Related Benefits
Service Provision Benefits
Table 9. Summary of Benefits for Each Major Category and Subcategory
Range of Benefits (in Point Estimate of
2001 $ per participating Benefits (in 2001 $ per
household: Net Present participating household:Value) Net Present Value)
Total for this Category
27-3680
72-283
99-3963
181
150
331
Household Benefits
Affordable Housing Benefits
Safety, Health, and Comfort
Benefits
Total for this Category
62-8663 783
0-2746
62-11,409
123
906
Societal Benefits
Environmental Benefits
Social Benefits
Economic Benefits
Total for this Category
68-67,061 869
0-183 117
190-7642 1123
258-74,886 2109
419-90,258 3346Total for All Benefit Categories
associated with it. Actual benefits wil be higher or lower in specific households and locales
based on what programs exist, what fuels are used, the magnitude of energy savings, and other
factors. More important than the precise dollar figures is the indisputable fact that nonenergy
23
benefits represent a significant addition to the energy savings benefit achieved by the
Weatherization Assistance Program.
The point estimate for total nonenergy benefits given above is substantially higher than
the total value presented a decade ago in ORN's national weatherization evaluation (Brown et
aI. 1993). The magnitude of all nonenergy benefits discussed in that study, when adjusted for
inflation, is $1394 in 2001 dollars. The difference between that figure and the $3346 reported in
this document is due almost entirely to the fact that our study quantified a much broader array of
nonenergy benefits than was addressed in the earlier work. For instance, the only ratepayer
benefit discussed in the national evaluation was the reduced carring cost on arrearages. In
contrast, our treatment of this topic also included avoided rate subsidies, lower bad debt write-off,
fewer emergency gas service calls, transmission and distribution loss reduction, and several other
factors. Similarly, our examination of household benefits included a number of factors-such as
water and sewer savings, reduced mobilty, and fewer ilnesses-that were not considered in the
earlier work. In the realm of societal benefits, our values are very similar to those presented in
the earlier study for both social and economic factors. For environmental benefits, the values
reported in this document are substantially higher than those presented in the earlier report but,
once again, this is largely due to our treatment of additional factors. While Brown et aI. only
assessed the benefits of reductions in two types of air emissions, sulfur dioxide (S02) and NOx,
our study looked at a variety of other air emissions (e.g., CO2, CO, CH4) plus other environmental
factors such as heavy metals and fish impingement. An additional explanation for the difference
between the value of environmental benefits reported in the two documents is that our study was
based on an updated, and substantially higher, amount of average household energy savings,
which directly affects the magnitude of emissions reductions. In all nonenergy benefit categories,
where our report dealt with the same specific benefits addressed by Brown et aI., our values
tended to be very similar.
The combined net present value of $3346 for all nonenergy benefit categories compares to
an average net present value of energy savings of $3174 and an average total cost per
weatherization of$I779, once again in 2001 dollars. The energy savings figure is based on the
value of savings for houses heated by natural gas taken from a meta-evaluation of the
Weatherization Assistance Program performed by ORN (Berry et aI. 1997) to update findings
from the national evaluation. The value of annual energy savings reported in that study was
inflated to account for future energy prices using long-term projections developed by the U.S.
Energy Information Administration (2001) and discounted using the discount rate recommended
by the Office of Management and Budget. The figure used here for weatherization costs
represents total costs (including labor and materials as well as program overhead and
management) for the average weatherized dwellng and was generated by taking the most recent
available information from the Weatherization Assistance Program's grants management data
system and adjusting the average cost per weatherized unit to 2001 dollars using the Consumer
Price Index multiplier.
It is important to note that total estimated non energy benefits are slightly greater than the
value of energy savings over the lifetime of the weatherization measures installed. The
benefit/cost ratio for gas-heated houses, combining both energy and nonenergy benefits and
24
comparing that figure to total costs (labor, materials, and overhead) for the average weatherized
horne, is approximately 3.7, meaning that $3.70 in benefits are realized for every dollar spent.
This comparison of all benefits to all costs is referred to as the "societal perspective." Low and
high values for the societal benefit/cost ratio, using low and high nonenergy benefit estimates, are
2.0 and 52.5, respectively.
Whatever assumptions are made, the total estimated value for all nonenergy benefit
categories combined is lower than it could be, because the estimate does not contain some
benefits that have not been monetized. It must also be noted that there are numerous uncertainties
in the estimates reported above. The environmental benefit calculations in particular are subject to
wide ranges in assumptions about air emissions prevented per weatherized horne and the dollar
values associated with reducing each air pollutant. In addition, nonenergy benefits in many
different categories are likely to vary widely by climate, fuel type, and local economic conditions.
In general, our point estimates are conservative and tend to be much closer to the lower than the
upper end of the full range of values presented in the literature.
Potentially important future research projects on the subject of nonenergy benefits include
the following: assessing subjective nonenergy benefits that participants receive from
weatherization (e.g., improved comfort); following a panel of weatherized homes over time to
assess the benefits of weatherization provided to successive occupants; and conducting
comprehensive life cycle assessments to better understand all the environmental benefits and
costs associated with energy use reductions and installation of energy effciency measures.
25
6. ACKNOWLEDGMENTS
We wish to acknowledge two major sources for this literature review. The first source is
the compendium of high quality work performed in this area over the last several years by Lisa
Skumatz and several of her collaborators. The second extremely helpful source is the meta-study
conducted by Jeff Riggert and his colleagues in 1999. In addition, we would like to thank Linda
Berr and Joel Eisenberg for providing help and encouragement throughout the course of this
project and for their valuable comments on this report.
27
7. REFERENCES
Berr, L. 1997. State-Level Evaluations of the Weatherization Assistance Program in 1990-1996:
A Metaevaluation That Estimates National Savings, ORNL/CON-435, Oak Ridge
National Laboratory, Oak Ridge, TN, January.
Berr, L., Brown, M., and Kinney, L. 1997. Progress Report of the National Weatherization
Assistance Program, ORNL/CON-450, Oak Ridge National Laboratory, Oak Ridge, TN,
September.
Biewald, B. et al. 1995. Societal Benefits of Energy Effciency in New England, Tellus Institute.
Blasnik M.1997. "A Comprehensive Evaluation of Ohio's Low-Income HWAP: Big Benefits for
Clients and Ratepayers," 1997 Energy Program Evaluation Conference, Chicago, Ilinois.
Brown, M., Berr, L., Balzer, R., and Faby, E. 1993. National Impacts of the Weatherization
Assistance Program in Single-Family and Small Multifamily Dwellngs, ORNL/CON-326,
Oak Ridge, Tennessee, May.
Bureau of Labor Statistics 2001. Consumer Price Index-All Urban Consumers, Washington, DC,
July.
Burtraw, D., Krpnick, A., Mansur, E., Austin, D., and Farrell, D. 1997. The Costs and Benefits
of Reducing Acid Rain, RFF 97-31-Rev, Resources for the Future, Washington, DC.
Burtraw, D. and Toman, M. 1997. The Benefits of Reduced Air Pollutants in the US. from GHG
Mitigation Policy, RFF Climate Issue Brief #7, Resources for the Future, Washington,
DC, October.
Colton, R. 1994. Weatherization Assistance Program Evaluations: Assessing the Impact on Low-
Income Abilty-to-Pay, Fisher, Sheehan and Colton, Belmont, MA, July.
Economic Research Associates (ERA) 1993. Energy Effciency and Minnesota Jobs: The
Employment Impacts of Electric Utilty Demand-Side Management Programs, Eugene,
Oregon, February.
Galvin, M. 1999. Examination of Components of an Environmental/Economic Benefit Adder,
Optimal Energy, Inc., 66 Main St., Middlebury, VT, ApriL.
Goulder, L. 2000. Confronting the Adverse Industry Impacts of CO2 Abatement Policies: What
Does It Cost, Issue Brief No. 23. Resources for the Future, September.
Hil, D., Dougherty, W., and Nichols, D. 1998. Home Weatherization Assistance Program
Environmental Impact Analysis, Tellus Study #95-247ÆN, June.
29
Hil, D., Nichols, D., and Sarnow, H. 1999. "The Environmental Benefits of Low-Income
Weatherization." International Energy Program Evaluation Conference, Denver.
Howat, J., and Oppenheim, J. 1999. Analysis of Low-Income Benefits in Determining Cost-
Effectiveness of Energy Effciency Programs, NCLC, ApriL.
Magouirk, J. 1995. "Evaluation of Non-Energy Benefits from the Energy $avings Parters
Program," 1995 Energy Program Evaluation Conference, Chicago, Ilinois.
Megdal, L. and Piper, M. 1994. "Finding Methods to Estimate Social Benefits of Low-Income
Energy Efficiency Programs," 1994 ACEEE Conference Proceedings, Asilomar,
California.
Mils, E. and Rosenfeld, A. 1994. "Consumer Non-Energy Benefits as a Motivation for Making
Energy-Effciency Improvements," 1994 ACEEE Conference Proceedings, Asilomar,
California.
National Center for Appropriate Technology 2001. 2000 - 2001 State-by-State Supplements to
Energy Assistance and Energy Effciency, Compiled by the LIHEAP Clearinghouse.
ww.ncat.org/liheap/tables/stsupup2.htm.
National Consumer Law Center 1999. Analysis of Low-Income Benefits in Determining Cost-
Effectiveness of Energy Effciency Programs, Draft, March 18.
National Research Council200L. Energy Research at DOE: Was It Worth It? National Academy
Press, Washington, DC.
Nevin, R. and Watson, G. 1998. "Evidence of Rational Market Valuations for Home Energy
Efficiency." The Appraisal Journal. p. 403.
Offce of Transporttion Technology 2001. OTT Program Analysis Methodology: Quality Metrics
2002, U.S. Departent of Energy, Washington, DC, May 9.
Pigg, S., Dalhoff, G., and Gregory, J. 1995. "Measured Savings from Iowa's Weatherization
Program," 1995 Energy Evaluation Conference, Chicago, Ilinois.
Pye, M. 1996. Energy Effciency Programs for Low-Income Households: Successful Approaches
for a Competitive Environment, ACEEE, Washington, DC, August.
Riggert, J., Hall, N., Reed, J., and Oh, A. 2000. "Non-Energy Benefits of Weatherization and
Low-Income Residential Programs: The 1999 Mega-Meta-Study," 2000 ACEEE Summer
Study on Energy Efficiency in Buildings Conference Proceedings, 8.305.
30
Riggert, J., Oh, A., Hall, N. P., Reed, J. H. 1999. An Evaluation of the Energy and Non-energy
Impacts ofVermonts Weatherization Assistance Program, TecMRT Works. Oregon,
WI. November.
RPM Systems, Inc. 1995.1994 Filng With Pennsylvania Public Utilty Commission, New Haven,
CT.
Sheehan, M. 1994. Energy Effciency and the Low-Income Consumer: Planning, Designing and
Financing, Fisher, Sheehan and Colton, Belmont, MA, October.
Skumatz, L. and Dickerson, C. 1997. "Recognizing All Program Benefits: Estimating the Non-
Energy Benefits ofPG&E's Venture Partners Pilot Program (VPP)," 1997 Energy
Evaluation Corierence, Chicago, Ilinois.
Skumatz, L. and Dickerson, C. 1998. "Extr! Extra! Non-Energy Benefits Swamp Load Impacts
for PG&E Program!" 1998 ACEEE Corierence Proceedings, Asilomar, California.
Skumatz, L. and Dickerson, C. 1999. "What Do Customers Value? What Benefits Utilties?
Designing to Maximize Non-Energy Benefits form Efficiency Programs in the Residential
Sector," 1999 Energy Program Evaluation Corierence, Denver, Colorado.
Skumatz, L., Dickerson, C., and Coates, B. 2000. "Non-Energy Benefits in the Residential and
Non-Residential Sectors-Innovative Measurements and Results for Participant Benefits,"
2000 ACEEE Corierence Proceedings, Asilomar, California.
Skumatz, L. 2000. Non-Energy Benefits Analysis for Selected PG&E Residential Programs,
Skumatz Economic Research Associates, Inc. Seattle, Washington, February.
Skumatz, L. 2001. Non-Energy Benefits (NEBS): Understanding and Measuring All Net Program
Benefits, Draft, Skumatz Economic Research Associates, Inc., Superior, Colorado, March.
TecMRKT Works, Skumatz Economic Research Associates Inc., and Megdal Associates 2001.
Low Income Public Purpose Test (LIP PT) 3rd Technical Memorandum, Draft.
U.S. Energy Information Administration 2000. Type of Heating in Occupied Housing Units,
Selected Years, 1950 -1999. ww.eia.doe.gov/emeu/aer/txt/tab0207.htm.
u.S. Energy Information Administration 2001. Annual Energy Outlook 2002 with Projections to
2020, DOEÆIA-0383 (2002), Washington, DC, December.
U.S. Environmental Protection Agency 1997. Community Water System Survey, Volume 1:
Overview, EPA 815-R-97-001, Washington, DC, January.
u.S. Environmental Protection Agency 2001. Protect Your Family from Lead in Your Home,
EPA747-K-99-001, Washington, DC, September.
31
Vermont Energy Investment Corporation 1995. Impact Evaluation of the 1993-1994 Vermont
Weatherization Assistance Program, December 22.
Weatherization Network 1999. Weatherization Plus: Opportunities for the 2¡st Century,
Milennium Committee Report.
ORN/CON-484
INTERNAL DISTRIBUTION
1. L. G. Berr
2. M. A. Brown
3. W. G. Craddick
4. T. R. Curlee
5-22. M. T. Eady
23. J. F. Eisenberg
24. E. C. Fox
25. M. B. Gettings
26. S. G. Hildebrand
27. M. Schweitzer
28. R. B. Shelton
29. B. E. Tonn
30-32. ESD Library
33. ORN Central Research Library
34. ORNL Laboratory Records-RC
EXTERNAL DISTRIBUTION
35. Mr. Kevin Abbott, Community Action Agency of Northeast Alabama, P.O. Box 1487,
Rainsvile, AL 35986.
36. Mr. Robert Adams, National Association for State Community Service Programs, 400 N.
Capitol Street, NW, Suite 395, Washington, DC 20001.
37. Mr. Eric Beaton, U.S. DOE Boston Regional Offce, Weatherization Program Manager,
JFK Federal Building, Room 675, Boston, MA 02203-0002.
38. Ms. Beth M. Cahall, U.S. DOE Philadelphia Regional Offce, Weatherization Program
Manager, 1880 John F. Kennedy Boulevard, Suite 501, Philadelphia, PA 19103-7483.
39. Mr. James Childs, U.S. DOE, EE-42, Room: 5£-066, Offce of Technology Assistance,
1000 Independence Avenue, SW, Washington, DC 20585.
40. Mr. Rob DeSoto, U.S. DOE Golden Regional Offce, Weatherization Program Manager,
1617 Cole Boulevard, Golden, CO 80401.
41. Ms. Jean M. Diggs, U.S. DOE, EE-42, Room: 5£-080, Office of Technology Assistance,
1000 Independence Avenue, SW, Washington, DC 20585.
42. Mr. Jerome Dion, U.S. DOE, EE-40, Room: 5£-052,1000 Independence Avenue, SW,
Washington, DC 20585.
43. Mr. Denis J. Feck, U.S. DOE, EE-42, Room: 5£-098, Offce of Technology Assistance,
1000 Independence Avenue, SW, Washington, DC 20585.
44. Ms. Carole Gates, U.S. DOE Seattle Regional Office, Weatherization Program Manager,
800 Fifth Avenue, Suite 3950, Seattle, W A 98104.
45. Mr. John Howat, National Consumer Law Center, 77 Summer Street, 10th Floor, Boston,
MA 02110-1006.
46-55. Ms. Gail N. McKinley, U.S. DOE, EE-42, Room: 5£-080, Offce of Technology
Assistance, 1000 Independence Avenue, SW, Washington, DC 20585.
56. Mr. Jerrold Oppenheim, 57 Middle Street, Gloucester, MA 01930.
57. Mr. Michael Peterson, U.S. DOE Chicago Regional Offce, Weatherization Program
Manager, One South Wacker Drive, Suite 2380, Chicago, IL 60606.
58. Dr. Meg Power, Economic Opportunity Studies, 444 N. Capitol Street, Suite G-80,
Washington, DC 20001.
59. Mr. Gregory M. Reamy, U.S. DOE, EE-42, Room: 5£-066, Offce of Technology
Assistance, 1000 Independence Avenue, SW, Washington, DC 20585.
60. Mr. JeffRiggert, TecMRKT Works, 165 W. Netherwood, Oregon, WI 53575.
61. Mr. P. Richard Rittelmann, FAIA, Executive Vice President, Bur Hil Kosar Associates,
400 Morgan Center, Butler, PA 16001-5977.
62. Ms. Bernadette Ruffn, U.S. DOE AtlantaRegional Offce, Weatherization Program
Manager, 730 Peachtree Street, NE, Suite 876, Atlanta, GA 30308.
63. Dr. Lisa A. Skumatz, Skumatz Economic Research Associates, Inc., 762 Eldorado Drive,
Superior, CO 80027.
64. Mr. David Terr, NASEO, 1414 Prince Street, Suite 200, Alexandria, VA 22314.
65. Dr. Susan F. Tierney, The Economic Resource Group, Inc., One Miffln Place,
Cambridge, MA 02138.