Xcel Energy Inc. · NASDAQ:XEL

Xcel Energy — E Source — Q1 2011 Earnings Presentation

35 slides from Xcel Energy's earnings presentation, May 19, 2011

1. Slide 1: DSM Industry Trends

   DSM Industry Trends Presentation to the Xcel DSM Roundtable Rachel Reiss Buckley, Director, Efficiency Research Tim Stout, Director, Efficiency Services www.esource.com May 19, 2011

2. Slide 2: Presentation Agenda

   Presentation Agenda ƒ Strategic Issues Affecting DSM ƒ Observations ƒ Program Types in the Spotlight ƒ Behavioral ƒ Codes and standards ƒ Market transformation ƒ Future of DSM ƒ Q&A 2 www.esource.com || © 2011 E Source

3. Slide 3: Strategic DSM Issues

   Strategic DSM Issues ƒ The end of ARRA funding ƒ Continued ramp-up in goals and budgets ƒ Dearth of emerging technology ƒ Growth in stricter codes and standards ƒ Greater regulatory scrutiny of results ƒ More stable and wider growth in smart grid ƒ Advances in Plug-in and all-electric vehicles ƒ Uti

4. Slide 4: Who is Doing DSM (2010)?

   Who is Doing DSM (2010)? 4 www.esource.com || © 2011 E Source

5. Slide 5: Growth in DSM Spending

   Growth in DSM Spending Source: ACEEE 5 www.esource.com || © 2011 E Source

6. Slide 6: Top 25 Utilities in DSM Spending in 2009

   Top 25 Utilities in DSM Spending in 2009 Pacific Gas & Electric Co $‐ $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 ($000)Southern California Edison Co Florida Power & Light Co Public Service Elec & Gas Co San Diego Gas & Electric Co New York Power Authority Massachusetts Electric Co Baltimo

7. Slide 7: DSM Goals Continue to Rise (Electric)

   DSM Goals Continue to Rise (Electric) http://www.esource.com/members/EDRP-F-37/Focus_Report/DSM_Budgets_and_Goals 7 www.esource.com || © 2011 E Source

8. Slide 8: DSM Goals Continue to Rise (Gas)

   DSM Goals Continue to Rise (Gas) http://www.esource.com/members/EDRP-F-37/Focus_Report/DSM_Budgets_and_Goals 8 www.esource.com || © 2011 E Source

9. Slide 9: Efficiency Goals: 2010 vs. 2011

   Efficiency Goals: 2010 vs. 2011 Goals range between -16% and 48%. Top 5 increases were: Savings Goal (MWh) Utility Increase (%) 2010 vs 2011 Detroit Edison 48% National Grid 44% PNM 27% APS 22% Seattle City Light 21% http://www.esource.com/members/EDRP-F-37/Focus_Report/DSM_Budgets_and_Goals 9 www.e

10. Slide 10: Lighting = Key to Achieving 2010 Goals

    Lighting = Key to Achieving 2010 Goals Source: AESP 2010 Presentation, “Energy Efficiency Investments in the Midst of an Economic Downturn,” Wendy Tobiasson, KEMA Services Inc. 10 www.esource.com || © 2011 E Source

11. Slide 11: Changing Regulatory Environment

    Changing Regulatory Environment ƒ Mechanisms encouraging DSM becoming more prevalent ƒ State Energy Efficiency Resource Standards (EERE) and Renewable Portfolio Standards (RPS) ƒ Regulators want to know how money is being spent 11 www.esource.com || © 2011 E Source

12. Slide 12: Lost Revenue Adjustment & Revenue Decoupling Mechanisms

    Lost Revenue Adjustment & Revenue Decoupling Mechanisms 22 States + 7 pending Performance Incentives for Electric Efficiency 21 States + 6 pending Source: IEE July 2010 12 www.esource.com || © 2011 E Source

13. Slide 13: Source: ACEEE

    Source: ACEEE 13 www.esource.com || © 2011 E Source

14. Slide 14: Bringing the Baseline Up – New Equipment Standards

    Bringing the Baseline Up – New Equipment Standards ƒ Recent changes will impact utility programs ƒ Motors (Dec 2010): no new specs for premium efficiency ƒ Lighting ƒ Water heaters (2015): will change the market ƒ Residential HVAC ƒ Central air-conditioners/heat pumps: debate about regional standard

15. Slide 15: What to do About Residential Lighting?

    What to do About Residential Lighting? EISA 2007 does not signify the end of CFL programs as we know them ƒ The baseline will become slightly more efficient, dimmer incandescents—not CFLs ƒ CFLs have not reached market saturation ƒ Think of residential lighting program, not CFLs ƒ CFLs not good for

16. Slide 16: What Are Other Utilities Doing About CFLs Now?

    What Are Other Utilities Doing About CFLs Now? ƒ Educate about early retirement of incandescent bulbs ƒ Don’t wait for them to burn out ƒ Focus on specialty bulbs and LEDs ƒ Promote and drive market ƒ Dimmable, 3-way, decorative fixtures ƒ Emphasis on specific market sectors ƒ Low-income ƒ Go to gro

17. Slide 17: Economic Downturn Affect on Programs

    Economic Downturn Affect on Programs ƒ More low-cost measures instead of comprehensive projects ƒ Greater impact on gas programs ƒ Repair vs replace; more O&M ƒ Less industrial production ƒ More uptake on utility financing offers ƒ Potential solutions ƒ Provide larger incentives for customers who ac

18. Slide 18: How Are We Going to Get From Here to There?

    How Are We Going to Get From Here to There? www.esource.com || © 2011 E Source

19. Slide 19: How Will We Get There From Here?

    How Will We Get There From Here? Several promising options: ƒ Behavior change programs ƒ Codes and standards ƒ Market transformation ƒ Other ideas ƒ More lighting ƒ Increased reliance on custom programs ƒ Targeted marketing 19 www.esource.com || © 2011 E Source

20. Slide 20: Taking It To The Streets: Behavior Change Programs

    Taking It To The Streets: Behavior Change Programs Team Power Smart Courtesy: Idaho Power 20 www.esource.com || © 2011 E Source

21. Slide 21: Types of Commercial Behavioral Programs

    Types of Commercial Behavioral Programs ƒ Employee awareness programs ƒ BC Hydro, NRCan, NEEA ƒ Government/Institutional Partnership Programs ƒ NSTAR: Marshfield ƒ SCE: Energy Leaders ƒ Manchester Challenge 21 www.esource.com || © 2011 E Source

22. Slide 22: Commercial Behavior Change Programs: Energy Management

    Commercial Behavior Change Programs: Energy Management ƒ Energy Team Facilitation ƒ Focus on integration of strategic energy management, continuous savings and process improvement ƒ WI Focus on Energy, NEEA ƒ Energy Manager/Resource Conservation Manager Placement ƒ Utility pays portion of salary, pl

23. Slide 23: Competitions

    Competitions ƒ Between college dorms ƒ Boston College saved over 44,000 kWh in a month-long competition in 2009 ƒ Hamilton College Dorm Energy Battle ƒ Otter Tail Power Campus Energy Challenge ƒ Avista Utilities’ Power Down Add Up Challenge ƒ K-12 competitions ƒ Between classrooms ƒ Between schools

24. Slide 24: Residential Behavior Change Program Types

    Residential Behavior Change Program Types ƒ Pricing programs ƒ Direct feedback via in-home devices (IHDs) ƒ Must actively use it; Need customer education ƒ Questions about persistence and ease-of-use ƒ Indirect feedback via enhanced billing ƒ Motivational and normative messages along with customized

25. Slide 25: Potential Savings

    Potential Savings Source: ACEEE 25 www.esource.com || © 2011 E Source

26. Slide 26: Behavior Change Initiatives Are Most Successful If…

    Behavior Change Initiatives Are Most Successful If… ƒ Utilize multiple intervention strategies in combination ƒ Targeted messaging informed by segmentation and barriers research ƒ Message(s) delivered from trustworthy sources ƒ Use pilots, properly designed experiments, plan for evaluation 26 www.es

27. Slide 27: Codes and Standards

    Codes and Standards 27 www.esource.com || © 2011 E Source

28. Slide 28: Utility Involvement with Codes & Standards

    Utility Involvement with Codes & Standards ƒ Development – design of code language and cost- effectiveness testing of proposed code ƒ Adoption – support and promotion of the adoption of new efficiency standards ƒ Training – technical assistance, workshops, training, and testing of builders, contract

29. Slide 29: Claiming Savings from Codes & Standards

    Claiming Savings from Codes & Standards ƒ California: verified energy savings from utility involvement in codes and standards programs are credited towards energy efficiency targets – amount to 4 percent of total energy savings ƒ Arizona: utilities can count the savings from codes and standards prog

30. Slide 30: Market Transformation

    Market Transformation ƒ Definition: “ Long-lasting sustainable changes in the structure or functioning of a market achieved by reducing barriers to the adoption of energy efficiency measures to the point where further publicly-funded intervention is no longer appropriate in that specific market” Sou

31. Slide 31: What's new in Market Transformation

    What’s new in Market Transformation ƒ The Old: ƒ CFLs ƒ Clothes Washers ƒ Efficient motors ƒ Dishwashers ƒ The New: ƒ LED lighting programs ƒ Continuous commissioning ƒ Lighting controls ƒ Ductless heat pumps ƒ Demand-controlled ventilation ƒ Computer servers ƒ Zero-Net Energy Buildings 31 www.esour

32. Slide 32: Taking Credit for Market Transformation

    Taking Credit for Market Transformation ƒ Establish a methodology for evaluating the impact of MT programs in advance of their delivery ƒ Secure support from all stakeholders ƒ CA PUC and Northeast Energy Efficiency Partnerships (NEEP) are among the leaders in defining how to properly evaluate MT pr

33. Slide 33: Taking Credit for Market Transformation

    Taking Credit for Market Transformation ƒ Unless utilities have a firm evaluation methodology in place, they may reluctant to pursue “pure” MT initiative ƒ Must understand current market conditions to assess evolving patterns of adoption of technology and behavior change ƒ Ultimate indicators: ƒ Mar

34. Slide 34: Future of DSM…At Least For Now

    Future of DSM…At Least For Now ƒ Cost recovery and incentives are very important ƒ Programs will focus on proven technologies and let codes and standards do the heavy lifting ƒ Lack of comprehensive deep-dive programs will continue ƒ Segmentation and target marketing will be key ƒ Social marketing a

35. Slide 35: For more information

    For more information Rachel Reiss Buckley Director, Efficiency Research 303-345-9104 rachel_buckley@esource.com Tim Stout Director, Efficiency Services 303-345-9188, tim_stout@esource.com 35 www.esource.com || © 2011 E Source

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