1

CONSERVATION AND ENERGY-EFFICIENCY

AN AFFORDABLE SOLUTION TO OUR ENERGY FUTURE

Jason GrenierOtter Tail Power CompanyJune 18, 2015

COMPANY OVERVIEW

70,000 square-mile service area

422 communitiesAverage Population is about 400

Only three exceed 10,000

785 employees

MN 495, ND 200, SD 90

About 5,400 miles of

transmission lines

About 800 MW of owned generating capability

About 245 MW ofemission-free, renewable

wind generation

Wind energy supplies about 19 percent of our retail sites

Since 1992 we’ve helped customers conserve about as

much electricity as 258,500 average homes use in a year.

130,200 customers

OUR MISSION

To produce and deliver electricity as reliably, economically, and environmentallyresponsibly as possible to the balanced benefitof customers, shareholders, and employees and to improve the quality of life in the areas in which we do business.

4

OUR COMMUNITY POPULATIONS

SERVICE AREA AND FACILITY LOCATIONS

CANADA

NORTH DAKOTA

SOUTH DAKOTA

Garrison

Rugby

LANGDON WIND ENERGY CENTER

COYOTESTATION

JamestownLEGEND

Headquarters

Customer svc ctr

Coal-fired plant

Wind farm

Combustion turbine

We also own 6 small hydroelectric plants in MN

HOOT LAKE PLANT

Fergus FallsWahpeton

Oakes

Morris

LAKE PRESTONCOMBUSTION TURBINE

BIG STONE PLANT

LUVERNE WIND FARM

ASHTABULA WIND ENERGY CENTER

ASHTABULA III

Milbank

SOLWAY COMBUSTION

TURBINE

Crookston

Devils Lake

Bemidji

JAMESTOWNCOMBUSTION

TURBINE

CONSERVATION AND ENERGY EFFICIENCY, A PARTNERSHIP BETWEEN OTTER TAIL AND OUR CUSTOMERS

7

WHAT IS ENERGY EFFICIENCY AND ENERGY CONSERVATION?

• U.S. Dept. of Energy – Lawrence Berkeley National Laboratory:

• Energy Efficiency is “using less energy to provide the same service”.– Replacing an incandescent bulb with a CFL or LED bulb.– Replacing an old appliance with a new Energy Star appliance.

• Energy Conservation is reducing or going without a service to save energy.– Turning off a light– Taking a shorter shower

8

WHY IS ENERGY EFFICIENCY IMPORTANT?

• Benefits of Energy Efficiency include:

• Improve awareness and adoption of energy efficient technologies• Reduce energy costs for households and businesses• Defer utility infrastructure investments• Decrease emissions• Conserve resources• Build positive public relations

HOME ENERGY USE

A TYPICAL MINNESOTA HOME USES ABOUT 190 MILLION BRITISH THERMAL UNITS (MMBTU) OF ENERGY EVERY YEAR TO HEAT, COOL, LIGHT, AND OPERATE APPLIANCES AND ELECTRONICS.

STATE ENERGY USEFROM U.S. ENERGY INFORMATION ADMINISTRATION

11

HOW DO WE MEASURE ELECTRICITY?

What is a watt (W)?– The rate at which energy is produced or consumed. – Also known as Demand.– 1,000 watts equals 1 kilowatt (1 kW)

Hair Dryer = 1,877 watts Keurig = 1,500 watts Incandescent Bulb = 60 watts

12

HOW DO WE MEASURE ELECTRICITY OVER TIME?

What is a watt hour (Wh)?– Unit of energy equivalent to one watt of power over one hour of time.– Also known as Energy.– 1,000 watt hours equals 1 kilowatt hour (1 kWh)– Residential customers in our region are charged approximately 10 cents / kWh

1,875 watt * 1 hour = 1.875 kWh, nearly $0.20 in electricity costs to operate it for one hour.

60 watts * 8 hours = 480 watts or 0.480 kWh, about $0.05 in electricity costs

13

MONTHLY COST FOR COMMON HOUSEHOLD APPLIANCES?

https://www.otpco.com/save-energy,-save-money/calculate-your-savings/appliance-energy-use/

ApplianceApprox. average

wattageLow hours

of useHigh hours

of useLow kwh

High kwh

Low cost

High cost

Baseboard heater (4 ft., 250 watts/ft.) 1,000 100 200 100 200 $8.50 $17.00Clothes Dryer 5,000 6 28 30 140 $2.55 $11.90Clothes Washer 500 7 40 4 20 $0.30 $1.70Computer with monitor and printer 200 25 160 5 32 $0.43 $2.72Dishwasher 1,800 8 40 14 72 $1.22 $6.12Cable Box with DVR Standby Mode 45 744 744 33 33 $2.85 $2.85Microwave Oven 1,100 5 30 6 33 $0.47 $2.81Oven 3,500 10 50 35 175 $2.98 $14.88LED 32"-46" 100 60 440 6 44 $0.51 $3.74X-box 360 185 15 75 3 14 $0.24 $1.18Refrigerator 16-18 cu.ft. 400 150 300 60 120 $5.10 $10.20Water heater on off-peak rate, family of 4 4,500 90 138 405 621 $18.23 $27.95

HOW WELL IS YOUR HOME INSULATED AND SEALED?

REMEMBER 55% OF ENERGY USE IN HOMES IS FOR HEATING AND AIR-CONDITIONING.

OTTER TAIL’S 2012 RESIDENTIAL SURVEY

AGE OF SINGLE FAMILY HOMES:1%

2%5%

3%

3%

9%

16%57%

3%

2 years or newer 3 - 5 years

6 - 10 years 11 - 15 years

16 - 20 years 21 - 30 years

31 - 40 years Over 40 years

do not know

In 2012, 73% of homes in Otter Tail’s service territory were built prior to 1982.

Many building codes and standards have changed in that time.

HOME INSULATIONAND SEALING

SPRAY FOAM SEALS, INSULATES, AND CREATES A VAPORBARRIER.

LACK OF INSULATION AND AIR LEAKS COST MONEY.

18

OTTER TAIL’S HOME TRANSFORMER PROGRAM

• Electric Measures• Several CFL light bulbs

• Complete Home Energy Audit• Blower-door test• Thermal imaging

• Over a $500 Value!

• Heating and Cooling Measures• Exterior Door Sweep• Outlet Gaskets (4)• Caulking (50ft.) 1,015 kWh• Weather-Stripping for Windows (2)

• Hot Water Measures• Pipe Wrap Insulation 452 kWh 9 ft.• Faucet Aerator 84 kWh• Low-Flow Shower Head 276 kWh• Setback temp on Water Heater 141 kWh• Engine Block Heater Timer 244 kWh

HOME ENERGY AUDIT CANSAVE YOU MONEY

www.energy.gov

20

SIMPLE, LOW COST ITEMS ADD UP TO BIG SAVINGS!

www.energy.gov

www.energy.gov

21

SCHOOL KITS

• Otter Tail offers energy efficient items and educational materials to sixth through eight grade students.

• Students took school kit home and installed items with the help of their parents.

• Kits included an energy saving shower head, faucet aerator, car timer, six CFL bulbs, one LED bulb and installation instructions.

• The class with the most completed surveys won a pizza party.

– Annual savings per a school kit are 1,051 kWh.

22

HOUSE THERAPY – HELP FOR THOSE WHO NEED IT MOST

• Primary focus is to provide energy efficiency measures to income-qualified residential and farm customers.

• Program is implemented by Community Action Councils.

• Customers can save money through an energy analysis, direct install of certain products, weatherization, off-peak electric water heating, refrigerator and freezer replacement.

– Some recipients receive over 3,000 kWh in energy saving technology.

23

AIR-SOURCE HEAT PUMPS

• An Air-Source Heat Pump is an efficient home heating and cooling system contained all in one unit.

• Because it moves heat instead of making it, it will operate at more than 200% efficient.

• Less efficient as the temperature drops below 30 degrees. Requires supplemental heat during coldest part of winter.

– Annual savings of a 2.5 ton system are approximately 9,262 kWh and 4.6 kW when compared to resistance electric heat/cooling. Savings of over $900 annually.

www.yougen.co.uk

24

GEOTHERMAL HEAT PUMPS

• Geothermal Heat Pumps capitalize on renewable energy from the earth’s constant temperature of about 48 degrees in our region.

• The U.S. Department of Energy claims it is the most efficient electric option for heating and cooling.

• Typical geothermal heat pumps have 350% or greater energy efficiency.

– Annual savings of a 4.5 ton closed system are approximately 20,700 kWh and 10.3 kW when compared to resistance electric heat/cooling. Savings of over $2,500 annually. www.prostar-mechanical.com

25

BEHAVIORAL PROGRAMS

• Provide energy feedback to customer across economic groups and demographics.

• Share the goal of educating and motivating consumers to make behavior choices, home improvements, and informed buying decisions that reduce their personal energy use profile and maximize energy efficiency.

• Examples:• Opower Home Energy Reports• Aclara Home Energy Analyzer web portal• Rothsay Community Energy Challenge• UM-Crookston Campus Energy Challenge

26

BEHAVIORAL PROGRAMS

• The Home Energy Report• Accurate and current personal

billing information• Compares energy

consumption to similar-sized homes

• 6 reports annually through the mail– 162 kWh of savings / participant in

2014.

27

BEHAVIORAL PROGRAMS

• The Home Energy Analyzer• Complete picture of your home

energy use• 25 months of bill history• User can create a home profile• Helps create personalized

energy-saving and money-saving plan that fits your lifestyle– 692 kWh of savings / participant in

2014.

28

APPLIANCE RECYCLING

• Recycle your old energy hog refrigerator and freezer.

• Many utilities offer rebates to come and pick up your old fridge or freezer.

– 915 kWh of savings / refrigerator– 1,134 kWh of savings / freezer

BE BRIGHT CHANGE A LIGHT!OTTER TAIL PROMOTES CFLS AND LEDS TO OUR CUSTOMERS

30

TECHNOLOGY IS CONSTANTLY IMPROVING

www.energysipp.com

31

LEDS & CFLS = FAST PAYBACKIncandescent CFL LED

Approximate cost per bulb

$1 $2 $8 or less

Average lifespan 1,200 hours 8,000 hours 25,000 hours

Watts used 60W 14W 10W

No. of bulbs needed for 25,000 hours of

use21 3 1

Total purchase price of bulbs over 23 years

$21 $6 $8

Total cost of electricity

used (25,000 hours at $0.12 per kWh)

$180 $42 $30

Total operational cost over 23 years

$201 $48 $38

Here’s how much each type of bulb would cost to purchase and operate over a 25,000-hour lifespan (about 23 years at three hours per day)

If you replaced 20 incandescent bulbs with LED light bulbs throughout your home, you could save up to $3,260 over their 23-year lifespan (and that’s assuming utility rates don’t rise).

www.thesimpledollar.com

32

OTTER TAIL’S 2012 RESIDENTIAL SURVEY

29%

34%

14%

5%

9% 9%

How many Compact Fluorescents in home?

01-56-1011-1516+Didn't answer

In 2012, Otter Tail found 29% of homes had no CFLs and 63% of homes had five or less CFLs in the home.

SCHOOLS AND COMMERCIAL/INDUSTRIAL CUSTOMERSSIGNIFICANT ENERGY SAVINGS

OTTER TAIL’S COMMERCIAL EE PORTFOLIO

• Adjustable Speed Drives• Air Conditioning Control• Heat Pumps, Air-source &

Geothermal• Custom Grants• Industrial Process Efficiency• Lighting, Replacement & New• Motors• PC Power Supply• Re-Commissioning• Refrigeration

• In 2014, commercial programs accounted for 69% of Otter Tail’s 33.8 million kWh annual energy savings in MN.

• Large commercial and industrial customers account for just 1.3% of customers, but account for more than half of retail kilowatt-hour sales.

• In 2014, 44% of commercial energy savings results were from efficient lighting technologies.

ENERGY EFFICIENT DEMAND RESPONSE PROGRAMS

36

OTTER TAIL SENDS OUT A CONTROL SIGNAL DURING SYSTEM PEAKS

• Air-Conditioning Control (CoolSavings)– Customers receive a $7 a month bill credit in June through September for

allowing cooling equipment cycled on for 15 minutes then off for 15 minutes until a control signal is sent to restore normal operation.

– 45 kWh savings 0.66 kW coincident summer savings

• Water-Heating Control– Customers receive a $4 a month bill credit monthly or a discounted energy rate

for allowing their electric water heater to be turned off during peak and high energy price periods.

– Electric water heaters are highly efficient systems that also operate as thermal energy storage devices.

– 23 kWh savings 0.21 kW coincident summer savings

LOAD CONTROL PROGRAMS SAVE CUSTOMERS $

• Difference in blue and red line reflects investments Otter Tail can defer or go without.

Jun-1

5Ju

l-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Jan-1

6

Feb-16

Mar-16

Apr-16

May-16

500

550

600

650

700

750

800

850

900

With Demand Response

OTP Load without Demand Response

MW

Demand-side resources play a significant role in meeting future resource needs

Energy efficiency plays a significant role in meeting our customer’s energy needs

LIFETIME COSTS OF CONSERVATION / ENERGY EFFICIENCY

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

$0.0000

$0.0050

$0.0100

$0.0150

$0.0200

$0.0250

MN Conservation Lifetime Cost per KWH

For example: Otter Tail spends $7 on program costs to advertise and rebate a customer to buy a CFL bulb. The bulb will save approximately 39 kWh annually. The bulb will last for approximately 10 years. Lifetime savings is 39 kWh annually over ten years or 390 kWh. The total cost per kWh saved is $7 / 390 kWh = $0.018/kWh. LESS THAN 2 CENTS PER KWH!!!

41

How Energy Efficiency Stacks Up

Coyote Station near Beulah, ND

ALL RESOURCES MUST BE CONSIDERED IN OUR ENERGY FUTURE…….

43

ENERGY LINKS ALL OF US TOGETHER

• ……We all have a responsibility to use all natural resources wisely.

• Energy efficiency saves money, reduces emissions and saves our precious natural resources for future generations.

QUESTIONS ?