Midwest Energy Efficiency Alliance’s Refrigerator Rebate ... · refrigerator, they would visit their local Sears store and then purchase a new ENERGY STAR refrigerator and receive

Midwest Energy Efficiency Alliance’s Refrigerator Rebate and Recycling

Pilot Program

Final Report October 3, 2002

Sponsored by:

Refrigerator Rebate & Recycling October 3, 2002 Pilot Program – Final Report

Table of Contents

Introduction................................................................................................................................... 2 Goals............................................................................................................................................... 2 Program Implementation............................................................................................................. 2

Consumer Rebate ........................................................................................................................ 2 Refrigerator Recycling................................................................................................................ 2 Marketing.................................................................................................................................... 3 Process ........................................................................................................................................ 5

Budget ............................................................................................................................................ 6 Recycler’s Feedback ..................................................................................................................... 7

Program Message........................................................................................................................ 7 Advertising.................................................................................................................................. 7 Public Relations, News Reports and Interviews ......................................................................... 7 Mail-Outs .................................................................................................................................... 8 Retailer Involvement................................................................................................................... 8

Sears’ Feedback ............................................................................................................................ 8 Sponsors’ Feedback ...................................................................................................................... 8

Commonwealth Edison............................................................................................................... 8 Illinois Department of Commerce and Community Affairs ....................................................... 9

General.................................................................................................................................... 9 Evaluation ............................................................................................................................... 9 Future Outlook ........................................................................................................................ 9

Results and Analysis ..................................................................................................................... 9 Energy and Environmental Impact Analysis ............................................................................ 11

Energy Analysis .................................................................................................................... 11 Environmental Analysis........................................................................................................ 11

Polyurethane Foam ................................................................................................................... 11 Freons R-12 and R-134a ........................................................................................................... 11 Benefit-Cost Analysis ............................................................................................................... 12

Lessons Learned.......................................................................................................................... 13 Conclusion ................................................................................................................................... 14 Attachment A. ............................................................................................................................. 15

*** MEEA would like to extend special thanks to Rick Kallet with the Sacramento Municipal Utility District, James Mapp with the Wisconsin Department of Administration, Pete Bardhi and Kim Ihrig from National Grid for their advice and evaluation support for

this pilot program. ***

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Introduction An older refrigerator is the largest power consumer in many households and has ranked high on consumer-interest focus groups for recycling/rebate programs. On average, 12% of a household’s electricity usage comes from a single refrigerator. Studies have shown programs that combine the removal and recycling of an older refrigerator with the replacement of a new energy-efficient model will yield tremendous energy savings and can be cost-effective. As a result, The Midwest Energy Efficiency Alliance (MEEA) developed a pilot program for Illinois with the hope of developing a regional program in subsequent years. The Illinois Department of Commerce and Community Affairs (DCCA), Commonwealth Edison (ComEd), and the City of Chicago agreed to support and fund MEEA to implement an ENERGY STAR® refrigerator rebate and recycling pilot program. Goals In support of MEEA’s broad objective for this refrigerator program, the following goals were identified:

Obtain funding for a refrigerator rebate. Offer up to a $50 rebate via the retailer for 3,500 energy efficient refrigerators. Recycle 3,500 refrigerators in an environmentally sound manner and offer a bounty as an

added consumer incentive. Program Implementation The refrigerator rebate and recycling pilot program targeted Cook County in Illinois to offer up to a $50 rebate towards the purchase of an energy-efficient refrigerator as well as a $50 bounty to the purchaser for removal of an old refrigerator. If consumers had a second refrigerator (14.0 cubic feet or larger) that was still functional, the second refrigerator could have been recycled via the program. The consumer received a mail-in rebate when they purchase a new ENERGY STAR refrigerator and receive a mail-in bounty upon removal of their old refrigerator(s). The participating retailer and their partnered manufacturers paid for the rebate while MEEA sponsors paid for the bounty. Cook County was selected as the target market for this program due to the potential number of refrigerators that could be rebated and recycled. MEEA established a relationship with Sears to carry out this promotion where each entity provided cross marketing of the rebate and recycling/bounty programs, making the program appear seamless to the consumer.

Consumer Rebate Sears offered a national rebate on ENERGY STAR appliances in the month of April in support of Earth Month. Any consumer who purchased a select ENERGY STAR qualified refrigerator from any Cook County Sears store was eligible to receive a rebate by mail. Sears worked with the refrigerator manufacturers to provide this rebate.

Refrigerator Recycling While there are many benefits to refrigerator recycling programs, operational costs are high given the infrastructure needed to remove the refrigerators and dispose of them properly. Additionally, with the small number of refrigerators that were targeted for recycling and the large territory that was covered, the cost to recycle each refrigerator was higher than other

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recycling programs that have larger target numbers and multi-year commitments. The cost for recycling for this project, including a $50 bounty, was approximately $190 per refrigerator. JACO Environmental was selected as the recycler for this pilot program. They were chosen due to their standardized process of incorporating the incineration of polyurethane foam, which contains CFC-11, an ozone-depleting chemical. In the recycling process, all the steel, copper, aluminum, glass, and plastic was recycled and the refrigerants were destroyed or recycled through approved methods to prevent the associated greenhouse gases from leaking into the atmosphere. Due to the short amount of time JACO had to implement the recycling plant and the small number of refrigerators targeted in this pilot program, JACO opted to pick-up all refrigerators and haul them to California where they have an already established recycling facility. JACO was responsible for setting up a website (www.appliancerecycling.com) and a 1-800 number where consumers could call or log on to get more information on the program and schedule the pick-up time for their refrigerator if they met all of the three conditions of the program: 1) residing in Cook County; 2) the refrigerator(s) were still operational; and 3) the refrigerator(s) were at least 14.0 cubic feet. Since this was MEEA’s first experience with a recycling project, we were proactive in ensuring the environmental compliance with the hazardous material handling and disposal and the overall recycling process. MEEA staff worked with a member of ComEd’s compliance staff to review all of JACO’s permits and talked with JACO and the California office that issued the required permits. Pending the outcome of these discussions, ComEd would decide if it merited a trip to the recycling facility for further inspections. However, the compliance staff was satisfied with the information that they had reviewed and did not travel to California. Additionally, the contract with JACO ensured that all units would be recycled and required detailed data regarding the materials that were removed.

Marketing MEEA implemented a two-pronged marketing approach. The first approach was to work with the 20 Sears stores within Cook County to educate their retail staff on the refrigerator recycling b S to c r E w c th r p th il

ounty and sales strategies on the benefits of ENERGY TAR refrigerators. MEEA’s field representative traveled each Sears store prior to the start of the promotion to

onduct the preliminary trainings. They also provide the etail staff with a written summary of the program, NERGY STAR savings charts, and several riser cards that ere placed around the refrigerator section to alert

ustomers of the bounty offer. Tear-off coupons were on e riser so the customer could take a coupon that had the

ecycler’s website and 1-800 number as well as the rogram restriction home and call to set up a time to have eir old refrigerator(s) picked up for recycling. Figure 1. lustrates the riser card. The field representative also had

a letter of support from Sears Headquarters in case any of the Sears staff questioned the program.

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Figure 1.
http://www.appliancerecycling.com/


Figure 2. shows how the riser cards were placed at the Sears stores. Figure 3 depicts MEEA’s field representative training a Sears’ employee.

Figure 2. Figure 3.

The second marketing approach that MEEA utilized was to target customers in certain cities and towns in Cook County. The designated approach was to mail out a brochure on the program, which ComEd sent out using their customer databases, please see Figure 4. The cities of Chicago, Arlington Heights, Palatine, Rolling Meadows, Calumet City, Lansing and South Holland were selected by MEEA, with support from sponsors given the following criteria that included: An emphasis on low to middle income homes, which have a higher probability of having

an older refrigerator. Age of the homes since 35 percent of homes built before 1950 are likely to have

inefficient refrigerators.

Figure 1.

Towns that had transmission and distribution loading at 95% or greater planned load limits and were predominantly mature

Analysis of partner databases of single-family homes in targeted communities that would most likely meet the age and income requirements.

Figure 4.

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Newspaper ads, figure 5., in local papers in Arlington Heights, Calumet City, Lansing, Palatine, Rolling Meadows, and South Holland were also placed at the start of the promotion.

After the first few weeks of the promotion, MEEA and sponsors agreed to extend the promotion for at least another month so we would come closer to our target of 3,500 units. We realized it was unrealistic to expect that 3,500 units would be scheduled and picked up within one month and through conversations with JACO, a more appropriate target was 1,000 units per month. As a result, MEEA altered the initial ad and revisited our marketing strategy. In May and June weekly quarter-page black and white ads were placed in the Chicago Tribune and the Chicago Sun Times, full circulation. Calls picked up as soon as the ads appeared in the papers.

Figure 5.

Process The following describes the process MEEA envisioned the consumer would go through to receive the rebate and bounty on the purchase of an energy efficient refrigerator recycling of their older refrigerator:

The consumer heard about the promotion via the targeted ComEd mailing, targeted advertising and/or POP at Sears stores. The mailing and advertising will identify the participating retailer, and provide information regarding the rebate, recycling, and bounty portions of the program.

For consumers looking to purchase a new refrigerator, they would visit their local Sears store and then purchase a new ENERGY STAR refrigerator and receive up to a $50 mail-in rebate. Sears employees would inform them of the recycling portion of the program and give the customer the 1-800 number and website to schedule the pick-up of their old, working refrigerator for recycling. Consumers who were not in the market for a new refrigerator had the option to recycle a second refrigerator that was already in their basement or garage and/or purchase a new refrigerator and recycle their current refrigerator.

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Figure 6.


JACO then verified that the refrigerator(s) were working and hauled the refrigerator(s) to its warehouse to be recycled. At the time of pickup, the recycler provided the customer

with a booklet on energy saving tips for the home and a refrigerator magnet, Figure 6., with energy information as part of the promotion. Red “X’s” were spray-painted onto each fridge. Figure 7., The power cord was cut and their thermostats were damaged as they were placed on to the recycling truck. This helped to ensure that the refrigerators would not be resold and would be recycled. The recycling company then processed the

paperwork for the bounty and provided MEEA with the customer list and a copy of the triplicate form that was filled out when each refrigerator was picked up.

Figure 7.

In this process JACO discovered that the typical “Chicago” basement was older and smaller then what they have been accustomed to in California. As a result, it took the field staff twice as long to remove the older units and more often then not, the front door of the refrigerators had to be taken off in order to get the unit out of the house, Figure 8.

Figure 8. Budget The table below identifies the main program budget components and their associated costs.

Task Budget Administration & Legal Fees $30,000 Refrigerator Recycling $374,000 $50 Bounty per Refrigerator $136,000 Brochure – Printing & Mailing $45,500 Advertising – Design & Placements $28,400 Sears Support – Field Representative & POP $15,300 Media Outreach – Press releases $2,500 Magnets $800

Total $632,500

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The total number of refrigerators recycled was 2,721, so the cost per refrigerator for this pilot program was approximately $232. Recycler’s Feedback JACO provided MEEA with the following observations on the pilot program and recommendations that MEEA may want to undertake if this program becomes a regional program.

Program Message It has been JACO’s experience that the central message needs to emphasize all benefits in a more aggressive manner. Energy savings and environmental protection are actually a greater incentive than the $50 bounty, however in the Chicago market, JACO did not find this to be the case. More than 20% of the total bookings resulted in cancellations because customers found alternate ways of disposing of the old appliances. In some cases, they sold them for more money, and in others, they gave them to a friend or relative. By comparison, JACO’s experience in California, cancellations run only 3-4% because energy conservation and environmental issues have been emphasized for the past 8-10 years. JACO also believes that the best results will be achieved when second, old energy inefficient refrigerators are targeted. People can be convinced to do without their second refrigerator in their basement or garage if the marketing is done properly. JACO also recommends that freezers should be included in all advertising.

Advertising JACO asserts that the most cost-effective media they have found are print and cable TV, although with a small pilot program, JACO does not recommend TV advertising. Local newspapers have a low degree of success compared to citywide publications. JACO saw this when the Chicago Tribune and Chicago Sun Times ads ran and calls tripled on the first day. JACO was concerned that the pilot program did not feel continuous as MEEA and the sponsors evaluated the extension of the program after each month. There was not a great enough chance to gain the right momentum and the extensions could have lead to confusion of consumers who thought the program was over when in fact it had been extended.

Public Relations, News Reports and Interviews JACO maintains that this type of program has all of the elements to be newsworthy, and that MEEA should have taken more of an advantage of this free publicity from the beginning. For example, television and news reporters could be invited to the 1st pick-up to run a story on the evening news. Newspapers will often run a story and picture if it is breaking news. However, most media are reluctant to run a news story spotlighting a program that has been ongoing and may need an additional boost. However, the program resulted in an increase in calls the morning after the story ran.

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Mail-Outs JACO also noted that given consumers often receive junk mail, it is important that the message and method for these programs not get placed in this category. They thought that the cost of the full color brochure might have been overkill and the letter sent along with the brochure may have been enough. An alternative may be a two or three sentence mention on the actual monthly bill and has been effective in other programs that they have been involved in.

Retailer Involvement JACO commended MEEA’s efforts in working with a large retailer like Sears in the program and felt that the relationship was successful and was a benefit to the program. JACO did express concern that the consumers may have assumed that they had to buy an ENERGY STAR refrigerator in order to participate in the program, because the Sears staff were pushing the recycling program and may not have clarified the recycling opportunity to the consumer. Sears’ Feedback Sears observed a good increase in sales in Energy Star refrigerators while at the same time, overall sales for refrigerators ran at a decrease. Specifically, in April, ENERGY STAR refrigerators had an almost 10% increase in sales compared to an overall 2.3% decrease in total refrigerator sales for April. Overall, Sears stated that they struggled with sales comparisons in refrigeration over the last year because the items that were not going to qualify for the new ENERGY STAR standards, but were still energy star at the time the purchases were made, were on close out pricing. Therefore, January through July 2001, Sears sold a disproportionately high number of ENERGY STAR refrigerators. In 2002, although our line of ENERGY STAR products expanded, it was business as usual, without the special pricing available the year before. It is very difficult and costly to try to get redemption rates for specific stores compared to other stores. The training and distribution of the POP for the program was excellent. There were no problems regarding the POP except for the letter sent by ComEd did not exclude the Outlet stores nor made clear that the rebate was selected Energy Star product. But I should have caught that myself. Sponsors’ Feedback MEEA received comments from ComEd and Illinois DCCA. Their feedback is identified below.

Commonwealth Edison In regards to benchmarking, ComEd did not feel that statistically valid inferences could be made from the information gathered from the program due to the small sample size of the program. They would like to determine what value programs like this bring to their company. ComEd also expressed the need to address the ways customers can make purchases, including e-commerce and utilize these channels more effectively if future programs continue to link purchases to rebates.

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Illinois Department of Commerce and Community Affairs General The Refrigerator Rebate/Recycling pilot program represented an important step in educating consumers about the importance of energy efficiency and responsible disposal of old appliances. Partnerships at the local, regional and state level, exemplified in this pilot program, are crucial to successful consumer education and market transformation programs. The collaboration of resources between DCCA, MEEA, ComEd, and the City of Chicago helped to make this pilot program a success. Evaluation Sears provided the percentage that ENERGY STAR sales increased during the program timeframe but did not provide actual sales numbers as a result of the program. In addition, in some cases, it was unknown whether or not a secondary unit was in service prior to pick up. Therefore, the actual results of the program in terms of energy savings (from removed units and efficient replacement units), total number of ENERGY STAR units purchased, and overall environmental benefits were not available. However, the use of conservative estimates helped provide a practical evaluation of the program benefits in addition to suggestions for further development of appliance rebate/recycling programs. Future Outlook Perhaps future programs involving appliance rebates with or without recycling options would be more effective if early marketing took a stronger focus on consumer education prior to program initiation. Ideally a retailer would provide recycling pick up for the old refrigerator when a new efficient unit was delivered. In addition, as highlighted in the MEEA program analysis, focusing on energy savings and environmental benefits early in the program should help to reduce the number of pick up cancellations in such a program. Lengthening the program running time would allow for more consumer/retailer education and commitment. As more consumers become aware of the link between energy efficiency (and the inherent environmental benefits) and saving money, programs like the Refrigerator Rebate/Recycling Program will see continued growth and success. Results and Analysis From April through June 2002, 2,721 refrigerators were picked up and recycled in Cook County. This number was close to MEEA’s target and we are certain that if we had placed a second round of weekly advertising in the Chicago Tribune and the Chicago Sun Times, that we would have hit our target goal of 3,500 units. The table below summarizes the data collected by the recycler and their call center.

Total Phone Calls Taken 3898 Total Customers Scheduled 3248 Total Units Scheduled for Pick-Up 3455 Total Units Collected for Recycling 2721 Total Cancellations (21%) 724 Total Email Registrations 170 Total Number of Primary Units Collected 1602 Total Number of Secondary Units Collected 1119

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Total Number of Customers Who Recycled on 1 Unit 2359 Total Number of Customers Who Recycled 2 Units 181 Percentage of Customers Who Heard About the Program Via the Mailed Brochure 18.0% Percentage of Customers Who Heard About the Program Via a Newspaper Ad 26.2% Percentage of Customers Who Heard About the Program By Visiting a Sears Store 33.6% Percentage of Customers Who Heard About the Program From Another Source 19.9% Percentage of Customers That Did Not Respond to How They Heard About the Program 2.3% Total Estimated kWhs From All Units Removed and Recycled 3,376,224 Total Estimated kWhs From All Primary Units Removed and Recycled 1,987,766 Total Estimated kWhs From All Secondary Units Removed and Recycled 1,388,458 Total Estimated kWhs for Primary Units Replaced With ENERGY STAR /non ENERGY STAR units

1,081,350

Total Estimated KWhs Saved From Primary Units 906,416 Total Estimated kWhrs Credited From Secondary Units Assuming they were in use by the Consumer

763,652

Total Estimated kWhrs Not Credited From Secondary Units Assuming they were not in use by the Consumer

624,806

Total Estimated kWhrs Saved Through the Program (Primary and Credited Secondary Units) 1,670,068 Average Estimated kWhs Removed and Recycled Per Unit 1,240.80 As previously mentioned, the number of cancellations was extremely high. Future programs will need to stress the energy savings and environmental benefits in an attempt to reduce this number. Another interesting statistic is that the number of secondary units as a result of the brochure mailing (week 4/8-4/14) was approximately 45%, indicating that those customers understood that they did not have to buy a new refrigerator to participate. Once the newspaper ads and efforts with the retailer were underway, the percentage of secondary units being scheduled and collected fell to 23%. This indicates that 3 out of 4 customers were replacing their primary refrigerators as opposed to disposing of an old second refrigerator. JACO stated that most programs that are designed to target old, inefficient appliances, like this pilot program, generally result in a 50/50 mix of primary versus secondary refrigerators. It is evident that the larger newspaper ads had a high impact and were more cost-effective than the mailings. The ads in the Chicago Tribune and the Chicago Sun Times were quarter-page ads, having a significantly lower cost then half to full-page ads and seem to be just as effective. Weekly placement of these ads from the start of the promotion would have allowed us to reach our goal of 3,500 units in the three-month program period. Additionally, the outreach to the Sears retail staff notably helped the market the program. Sears staff received the benefit of training on the ENERGY STAR label as well as the benefits, both energy and economic, associated with the label. The staff in turn could use MEEA’s promotion to help sell refrigerators knowing that the consumer could receive an additional $50 for their older unit and not have to pay up to $75 for the proper removal of their refrigerator. Illinois law prohibits improper disposal of refrigerators and they cannot be land filled due to the hazardous materials in them.

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Energy and Environmental Impact Analysis Energy Analysis The table below identifies the number of refrigerators recycled in a specified time period, and the percentage of these units that had been used a primary and/or secondary refrigerator by the consumer. Additionally approximately 20% of all units recycled each week were sampled and using their model numbers and the homeenergy.org website. Their actual annual kWh energy consumption was established. This figure was then used to extrapolate the total energy consumption of all units recycled for the given period of time.

Dates Units Recycled

% Of Primary

Units

% Of Secondary

Units

Sample Size –

(~20%)

Sample Size Actual Annual

kWh Consumption

Estimated Total Energy

Consumption

4/8-5/5 814 68.2 31.8 152 187,605 1,005,974 5/6-6/1 658 68.2 31.8 112 133,985 788,262

6/3-6/30 584 45.7 54.3 116 143,798 724,995 7/1-7/27 665 49.7 50.3 132 169,903 856,993 Totals 2,721 58.9 41.1 512 635,291 3,376,224

Environmental Analysis The following is a summary of the material recycling for the 2721 refrigerators recycled:

Compressor Oils Total units recycled 2721 Less units containing ammonia or SO2 89 Units with oil to be recycled 2632 Average ounces per unit 11.79 Total ounces recycled 31,029 Total gallons recycled 242.38 Polyurethane Foam Total units recycled 2721 Less units containing fiber insulation 671 Less units containing insulation with 141B 154 Total units containing R-11 foam 1896 Average weight per unit in pounds 9.2 Total weight of polyurethane incinerated 17443 Freons R-12 and R-134a Total units recycled 2721 Less units containing ammonia or SO2 89 Total units containing R-12 or R-134a 2622 Total units containing R-12 2468 Average ounces per unit 8.375 Total ounces of R-12 recovered 20669.5 Total pounds of r-12 recovered 1291.84 Total units containing R-134a 154 Average ounces per unit 5.4 Total ounces of R-134a recovered 829.94 Total pounds of R-134a recovered 51.83

One hundred and thirty-nine of the 2721 units recycled had capacitors that could contain PCBs. These hazardous materials were stored in EPA approved 5-gallon containers and were picked up

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by JACO’s subcontractor, Asbury Environmental when full. JACO assumed that only a small fraction of the capacitors may have contained the PCBs but exercised maximum caution and treated all cylinders as if they did contain the PCBs. Several tons of plastics, glass and metals were also recovered and recycled in the program.

Benefit-Cost Analysis The following assumptions were made to enable MEEA to assess the financial evaluation metrics for the program: Using the 20% sample, MEEA assumed that the total number of operating units removed

and/or recycled through the program consumed 3,376,224 kWhs annually. The total number of units recycled was 2,721 consisting of 1,602 primary units and 1,119 secondary units.

MEEA assumed that 55% of the secondary units had been in use prior to being removed. In other words, out of the 1,119 units, only 615 of these units were being used by the homeowner and the remaining, while still operational, were not plugged in. So, MEEA is only realizing 55% of the total kWh removed from the secondary units. This percentage estimate was derived from the model that SMUD used in evaluating their program.

The secondary units removed were not replaced with a new secondary unit (1119 units = 1,388,466.39 kWh “taken off the grid” x 55% = 763,650.36 kWh actually saved by taking these units out of service. MEEA estimated that these units would remain in operation for an additional 5 years before being completely removed, so the 763,650 kWh is realized for the first 5 years of the analysis. This assumption was derived from similar evaluations conducted by National Grid in the Northeast.

The total number of units replaced (1602) through the program used 1,987,777.62 kWh annually BEFORE being replaced.

The energy used AFTER being replaced by an ENERGY STAR or non ENERGY STAR unit is 1,081,400 kWh annually. The difference is 906,377.62kWh per year in energy savings.

MEEA assumed that 75% of the primary units were replaced with a non-ENERGY STAR refrigerator with an average energy consumption of 700 kWh/year (~1202 units = 841,400 kWh annually). The remaining 25% of the primary units were replaced with the average ENERGY STAR refrigerator with an average annual energy consumption of 600 kWh/year (400 units = 240,000 kWh annually).

Life of a refrigerator is 19 years and estimated that the primary units had an average of 9 years remaining prior to being replaced. So, the 906,377kWhs was realized for 9 years in the financial analysis. This assumption was derived from similar evaluations conducted by National Grid in the Northeast.

Annual cost of electricity is $0.085/kWh with an annual energy escalator of 2.0%. ComEd is currently in a price freeze for the next 5 years, so the escalator does not come into effect until Year 6.

The analysis is in the perspective of MEEA’s overall program goal of saving energy and removing inefficient and high consumption refrigerator from the electric grid.

The discount rate is 3.33%.

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MEEA feels that these assumptions are very conservative and present a conservative estimate on the benefit-cost analysis. The following metrics were derived based on the above assumptions:

Net Present Value of the Pilot Program $897,346 Benefit-Cost Ratio 1.42 Average Value of the Energy Saved Over the Life of the Refrigerator $114,853 Simple Payback Period (Years) 5.51

Attachment A. illustrates the spreadsheet used to derive these calculations. Lessons Learned As evident in the analysis, the following are the principal lessons learned in the pilot program: Longer program timeframe – One month was simply not a realistic timeframe to have

3,500 units scheduled for pick-up. A better time frame would be to estimate 1,000 units per month. MEEA should have planned for a 4-month promotion to hit our target of 3,500 units.

Print ads are more effective than a mailing and are more cost-effective – the time and cost associated with the design, printing and postage of the 150,000 brochures was simply too costly given the response they received. However, the message in the brochure was more effective than the ad, although this can be remedied by changing the ad. On average, the print ads in the larger newspapers reached over 600,000 readers in and around Cook County for each run of the ad. Furthermore, with a larger program, newspaper ads and potentially TV and radio advertising will be much more cost effective than having to produce and mail out over one million brochures.

Work with recycler earlier on in the process – the recycler has extensive experience in how to tailor ads and how to generate press on the onset of the promotion and will be able to provide insights on how to get a program off the ground with little additional cost.

Get a longer standing commitment from the retailer – ideally, MEEA would like to offer a rebate on the purchase of an ENERGY STAR qualified refrigerator and providing the bounty for those that did purchase an ENERGY STAR refrigerator as well allowing any secondary units to be recycled without the obligation to purchase a new refrigerator.

Obtain commitments from several retailers – The success of having POP in the Sears stores and the relatively low cost of doing so, makes it attractive to offer trainings to retail staff in exchange for the marketing of the refrigerator bounty.

More lead time to implement the program – MEEA staff had only one month to issue and review requests for proposals for the field representative, POP, as well as develop the ad and brochure and give the final ok to the recycler to begin preparing for the program. That was simply not enough time to get the program off and running at full speed. Although all of the POP displays were placed in the stores and the brochures were mailed prior to the start of the promotion, a longer lead-time would have allowed MEEA staff to work with the recycler to hold a press event and obtain free press for the program.

Gather additional consumer information. It would have been helpful to ask the consumer if they had their secondary refrigerator in use prior to recycling it, as well as what they were going to replace their primary unit with.

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Obtain better refrigerator data. MEEA was unable to conduct a more extensive benefit-cost analysis since we did not have accurate data on the age of the units removed. Ideally, we could estimate the average age of primary units and determine how many years of operation they had left as well as determine how many more years the secondary units may have been kept in use.

Conclusion Overall, MEEA views this program as a great success. The very nature of a pilot program is to learn the best strategies and potential program design for a larger-scale effort. MEEA staff learned a significant amount through this process and will alter the program design to factor in the lessons learned. MEEA staff hopes to obtain funding commitments from several states, utilities and municipalities in the region to rollout a region wide program in 2004. MEEA staff will also look for other sources of funding such as state and municipal solid waste departments to help share the cost of the recycling.

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Attachment A.

Basic Financial Analysis for the Refrigerator Rebate and Recycling Pilot Program

Remaining Life Annual Year '1' Cost Cost of Energy Total KWhs Removed of Refrigerator Savings (kWh) Of Energy Escalator from Secondary Units

9 906,416 0.085 2.00% 763,652

Cost of the Net Present Value Benefit- Cost Discount Rate Average Value of Simple Program of Energy Saved Ratio Energy Saved Payback Period

(Years) $632,500 $897,346 1.42 3.33% $114,853.40 5.51

Present Value of Benefits Yr kWh Ave. Cost Value of Present Value of Benefits Saved $/kWh Energy (Energy Saved) 0 0 0.085000000 $0 $0.00 1 1,670,068 0.085000000 $141,956 $137,380.98 2 1,670,068 0.085000000 $141,956 $132,953.62 3 1,670,068 0.085000000 $141,956 $128,668.95 4 1,670,068 0.085000000 $141,956 $124,522.35 5 1,670,068 0.085000000 $141,956 $120,509.39 6 906,416 0.086700000 $78,586 $64,563.64 7 906,416 0.088434000 $80,158 $63,732.62 8 906,416 0.090202680 $81,761 $62,912.29 9 906,416 0.092006734 $83,396 $62,102.52

10 0 0.093846868 $0 $0.00 11 0 0.095723806 $0 $0.00 12 0 0.097638282 $0 $0.00 13 0 0.099591047 $0 $0.00 14 0 0.101582868 $0 $0.00 15 0 0.103614526 $0 $0.00 16 0 0.105686816 $0 $0.00 17 0 0.107800553 $0 $0.00 18 0 0.109956564 $0 $0.00 19 0 0.112155695 $0 $0.00 20 0 0.114398809 $0 $0.00 21 0 0.116686785 $0 $0.00 22 0 0.119020521 $0 $0.00 23 0 0.121400931 $0 $0.00 24 0 0.123828950 $0 $0.00 25 0 0.126305529 $0 $0.00 26 0 0.128831639 $0 $0.00 27 0 0.131408272 $0 $0.00 28 0 0.134036437 $0 $0.00 29 0 0.136717166 $0 $0.00 30 0 0.139451510 $0 $0.00

11,976,002 $1,033,681 $897,346

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Documents

Midwest Energy Efficiency Alliance’s Refrigerator Rebate ... · refrigerator, they would visit their local Sears store and then purchase a new ENERGY STAR refrigerator and receive