Turning on Hot Water Heater Programs

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Turning on Hot Water Heater Programs

• NET Conference
• February 7, 2007- Orlando

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How Load Strategies Link to Program Tactics
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How End Uses and Channels Link to Programs

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End-Use Strategy

• Load Strategy
• Load Shifting
• Challenge Outreach to plumbers and high
  upfront cost of energy efficient technology
• End-Use Tactic Water Heater Rentals

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Water Heater Opportunities

• State of the Industry
• Challenges
• Program Design Innovation

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Shape of the Market

• National Market Share
• 52 Gas 48 Electric
• Only 3 Major Mfgrs
• 50-50 Retail/Wholesale
• Planned Obsolescence
• 10-12 Yr Avg Tank Life
• Resistant to Change
• Primary Focus on Revenue Stream

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Shape of The Technology

• High-Efficiency, Long-Life, Non-Metallic,
  Electric WH
• Tankless/Instantaneous,
• Issues w/Gas and Electric
• Electric Heat Pump Water Heaters, 2X Efficiency

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Shape of Market Impacts

• Green Building Impact
• Environmental Value of Durability and Efficiency
• Global Warming Impact
• Monetary Value of GHG Emissions Displaced
• Market Pricing Impact
• Time-of-Use Pricing, Real Time Pricing and/or
  Critical Peak Pricing

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Shape of The Opportunity

• Approx. 10 of Installed
• Stock is Replaced Annually
• The Electric WH Load
• can be Managed through
• Demand Response
• Off-Peak Electric Water Heating is the Win-Win

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Rental Water Heaters

• Canada has over 2.5 million rental water heaters.
• Approximately 80 of the homes in Toronto have
  rental water heaters.
• Rental program started over 50 years ago.
• AWHR is the largest home water heater rental
  company in America.
• Over 120,000 customers in 11 states

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Who Rents?

• Those Who Cant Afford
• Those Who Dont Want to be Bothered
• Landlords

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Customer Value Proposition

• No Purchase Cost or Installation Charges
• In normal situations, customer do not have ANY
  initial expense.
• Toll-Free 24/7 Repair Hotline
• Worry-free service guarantee if anything goes
  wrong with the unit, it is repaired or replaced
  free of charge.
• We get a plumber to the customers home, which is
  more convenient than finding one on their own.
• High Quality, High Efficiency Equipment
• Long-life heaters reduce overall operating costs
  and save money
• Quality units have fewer problems which means
  less hot water interruptions for the user.
• Rental rate is 14.99 and 15.99 per month for 50
  and 80-gallon units, respectively.
• Affordability with peace of mind
• Rental rate is budget friendly with no up front
  costs.
• Initial contract term is 12 months and can be
  cancelled upon 30 days notice after the initial
  term.

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Plumber Value Proposition

• Easier sale to customer.
• A 15 monthly payment is more appealing to a
  customer than a several hundred dollar job.
• No up front cost, worry-free service guarantee,
  etc.
• On-going service work.
• Competitive service rates paid.
• Ongoing service work is awarded to those who
  generate the lead and continue to deliver quality
  customer service.
• Customer WILL call AWHR for service not always
  the case with an outright sale.
• Assured Payment.
• AWHR is responsible for payment do not have to
  chase individual customers.
• Additional Sales From AWHR.
• New customer leads and service work are allocated
  on the basis of performance meaning those who
  perform get additional business.
• New Customer Fee.
• Earn 350 for selling the rental significantly
  increasing their margin on a water heater
  installation.

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Utility Value Proposition

• New and incremental revenue stream
• Energy sales to new customers
• Long term retention of existing load
• Essential products to customers affordably
• Access to customers in competitive markets
• Ability to create long term customer loyalty
• Generate additional revenue Installation,
  Service long term satisfied customers
• Bring value added services to your customers
• Partner with a long term creditable organization
  in the rental industry

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Marketing The Rental Program

• Service technicians create awareness.
• Water heater stickers applied by service tech
  when in customers house doing other service
  work.
• Lterature regarding the benefits of the rental
  water heater program to leave with customers.
• Direct marketing.
• Target developments that are 8 to 10 years old.
• Direct mail, door hangers, mail box stuffers.
• Customer mailing insert.
• Insert to create awareness and value regarding
  rental option.
• Yellow page advertising.
• Include high quality, energy efficient, rental
  water heaters now available.