MEEA 2004 Regional ENERGY STAR Clothes Washer Rewards Rebate Program Final Report to:
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1 MEEA 2004 Regional ENERGY STAR Clothes Washer Rewards Rebate Program Final Report to: Midwest Energy Efficiency Alliance One East Erie Avenue, Ste 200 Chicago, IL 60611
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3 MEEA 2004 Regional ENERGY STAR Clothes Washer Rewards Rebate Program Final Report: Executive Summary The Midwest Energy Efficiency Alliance (MEEA) 2004 Regional ENERGY STAR Clothes Washer Rewards Rebate Program is part of a national campaign to increase consumer awareness and affordability of high efficiency residential laundry machines. The 2004 campaign rebated over 4,500 high efficient ENERGY STAR qualified washer units in the Midwest a 3,000 unit increase over ComEd, the State of Illinois Department of Commerce and Economic Opportunity, and the Southern Minnesota Municipal Power Authority (SMMPA) sponsored this year s program. Program Concept Three core strategies were used to increase consumer awareness and affordability of high efficiency clothes washers; product training for sales staff, a $75-$100 mail-in rebate on qualified ENERGY STAR models, and a cohesive regional marketing campaign to promote the program. The promotion ran for three months during the peak residential clothes washer sales period - April 15th July 15th. Nine manufacturers participated in the promotion; however Kenmore and Whirlpool, whose sales account for more than 50% of the residential ENERGY STAR qualified laundry machine market, did not participate. Partnering utilities contributed $50 per rebate while manufacturers contributed $25-$50 per rebate depending on whether the Modified Energy Factor of the washer fell below or above a rating of 1.6. Results The program rebated a total of 4,561 ENERGY STAR qualified clothes washers. The original program goal was 9,050 rebates; 6,800 from the State of Illinois, 1,600 from ComEd, and 650 from SMMPA. However, when Kenmore and Whirlpool declined to participate in the program, the overall goal was reduced to 4,300. MEEA 2004 Regional ENERGY STAR Clothes Washer Rewards Rebate Program Results Sponsor Rebate Goal Rebate Actual Percent of Goal ComEd 1, % State of Illinois 6,800 3,633 53% SMMPA % Total 9,050 4,561 50% Table 1. MEEA 2004 Regional ENERGY STAR Clothes Washer Program Results MEEA expanded the number of participating retailers throughout Illinois to offset the reduction in eligible machines for this promotion. The final results for the promotion reflect both the reduced market share limited by manufacturer participation as well as program expansion across all of Illinois. 3
4 Conclusions The Midwest Energy Efficiency Alliance (MEEA) 2004 Regional ENERGY STAR Clothes Washer Rewards Rebate Program was a successful campaign, rebating 3,000 more high efficiency washers than the year before. The biggest challenge to this campaign was absence of the two largest ENERGY STAR clothes washer manufacturers, Kenmore and Whirlpool. Slight changes in the program s design, including the addition of promotional mechanisms other than direct mail-in rebates, may boost future manufacturer participation. With increased manufacturer participation, MEEA is confident the goals reached this year could more than double in future promotions. 4
5 Table of Contents MEEA 2004 Regional ENERGY STAR Clothes Washer Rewards Rebate Program Final Report: Executive Summary...3 Program Concept...3 Results...3 Conclusions...4 Table of Contents...5 Midwest Energy Efficiency Alliance Regional ENERGY STAR Clothes Washer Rewards Rebate Program Final Report...6 Program Overview...6 Program Operations...7 Start - Up...7 Marketing Material Development...8 Retailer Training and Materials Disbursement...8 Advertising...8 Customer Service and Rebate Processing...10 Rebates by Electric Company...11 Store Production Numbers...12 Rebates by Manufacturer...13 Rebates by City...13 Energy Savings...14 Rebate Funding...15 Financial Analysis...16 Lessons Learned...17 Energy Star Optional Questions - Results:...18 Customer Comments
6 Midwest Energy Efficiency Alliance Regional ENERGY STAR Clothes Washer Rewards Rebate Program Final Report Program Overview The Midwest Energy Efficiency Alliance (MEEA) 2004 Regional ENERGY STAR Clothes Washer Rewards Rebate Program is an annual campaign to increase the market demand of high efficiency residential clothes washers throughout the Midwest. The program ran from mid-april thru mid-july as part of the U.S. Department of Energy (DOE)-designated National ENERGY STAR Appliance Promotion Period, which is undertaken collaboratively by manufacturers, ENERGY STAR, regional energy conservation organizations, and participating utilities. The 2004 Regional ENERGY STAR Clothes Washer Rewards Rebate Program utilized three core strategies to increase the market demand of high efficiency residential clothes washers: product training for sales staff, a $75-$100 mail-in rebate on qualified ENERGY STAR models, and a cohesive regional marketing campaign to promote the program. MEEA leveraged resources from the Southern Minnesota Municipal Power Authority (SMMPA), Commonwealth Edison and the Illinois Department of Commerce and Economic Opportunity (the State of Illinois) to implement the 2004 Regional ENERGY STAR Clothes Washer Rewards Rebate Program throughout the state of Illinois and in Southern Minnesota. During the initial program design, some significant changes were made to address concerns expressed by participating manufacturers in the 2003 Double Your Savings with ENERGY STAR campaign. Program changes emphasized three essential benefits for participating manufacturers: Increased promotional development time - more time was allocated for campaign planning and dialogue among participating entities. Product differentiation - a two-tiered rebate approach was developed for qualifying products to address issues related to the vast range and types of qualified clothes washers available in the marketplace. The two-tiered rebate approach is based on the Modified Energy Factor (MEF) which rates the efficiency of each model. Manufacturers contributed $25 or $50 per rebate, depending on the MEF rating of the ENERGY STAR qualified model. o MEF=Modified Energy Factor, a combination of Energy Factor and Remaining Moisture Content. MEF measures energy consumption of the total laundry cycle (washing and drying). It indicates how many cubic feet of laundry can be washed and dried with one kwh of electricity; the higher the number, the greater the efficiency. For more information please see 6
7 Manufacturer market differentiation - manufacturers requested minimizing the number of campaign marketing pieces that contained multiple manufacturers logos. A separate rebate application was developed for each manufacturer, rather than one application containing all of the participating manufacturers logos, while still maintaining a cohesive campaign look and feel. Nine manufacturers participated in the 2004 promotion: Maytag (includes Amana), Frigidaire, Fisher & Paykel, General Electric, Miele, Bosch, Equator, LG, and Asko (includes Eurotech). Kenmore and Whirlpool, two of the largest residential ENERGY STAR clothes washer manufacturers, elected not to participate. Through a competitive RFP process, Honeywell Utility Solutions was selected to implement the program. Honeywell was contracted to: Coordinate manufacturers and retailers Develop point-of-purchase (POP) materials Facilitate all program marketing and advertising Train retail sales staff Process rebates Provide monthly and final program reports MEEA s initial program goal was to process 9,050 rebates: 6,800 from the State of Illinois, 1,600 from ComEd, and 650 from SMMPA. The projection of rebates was adjusted (Table 2) when Kenmore and Whirlpool, whose sales represent 50% of the ENERGY STAR qualified washer market, announced they would not be participating in the program. MEEA 2004 Regional ENERGY STAR Clothes Washer Rewards Rebate Program Goals Sponsor Initial Rebate Goal Adjusted Rebate Projections ComEd 1, State of Illinois 6, SMMPA Total 9,050 4,425 Table 2 MEEA 2004 Regional ENERGY STAR Clothes Washer Program Goals Program Operations Start - Up As with last year s promotion, SMMPA elected to do their own rebate processing. MEEA was only contracted to process rebates for Commonwealth Edison and for the State of Illinois. The campaign s greatest challenge was to fulfill the rebate goal without oversubscribing rebates, insuring that the program would run through its end date of July 15. Last year s 7
8 program goals were met four weeks into the promotion, with the remaining customers placed on a waiting list. To compensate for the loss of Kenmore and Whirlpool, the original Illinois dealer participation territory was expanded across the entire state of Illinois. Toward the end of May, dealer participation expanded to include the entire state of Illinois. By that time, most dealers had heard about the program and already knew the guidelines. On June 1, dealer participation expanded into Madison and St. Clair counties, where 43 new stores requested to participate in the program. By June 6th, 319 stores had received training and were offering the program. 230 live training sessions were conducted and 89 stores received training over the phone. Marketing Material Development Promotional materials consisted of point-of-purchase (POP) displays, rebate applications and static cling ads that were attached to qualifying washer models. A committee at the national level standardized the rebate applications for a cohesive marketing campaign nationwide. Nine applications were created, one for each manufacturer. Each version had a different color to differentiate each manufacturer, while maintaining a consistent look. The applications also had the manufacturer s name and logo, the complete list of qualifying models, rebate amounts, and manufacturer specific information. Logos from the sponsoring agencies were also included on each application, varying by location. The design on the POP displays and the static cling ads were the same, and mirrored the advertisements that went out around the nation. The artwork consisted of a pair of shorts hanging on a wire to dry with money coming out of the pockets. Retailer Training and Materials Disbursement All original participating stores required product training by the program kickoff. Prior to the kick-off date, MEEA sent two program representatives on a two-week training blitz in Illinois. By April 15th, 187 stores (7 stores were added after the original stores had been selected) were trained and ready to start the promotion on schedule. Trainings were prearranged with the store or department manager and included all sales representatives. The trainings provided an introduction to the program, a review of the program guidelines and sales points for selling the qualifying models. Each store received two sales boards to put up around the sales area, static cling ads that were attached to the qualifying models and approximately 100 applications per manufacturer. By the end of May, dealer participation expanded to include all of Illinois due to lower than projected sale volumes. Most dealers had heard about the program and already knew the guidelines. By early June, 319 stores were participating in the state of Illinois. Live training sessions were conducted 230 stores, while the remaining 89 stores received training over the phone. Advertising SMMPA handled all advertising efforts for the promotion in Minnesota. In Illinois, ComEd committed $11, for program advertising, while the State of Illinois agreed to contribute $12, for a total of $23, Advertising was scheduled to occur 8
9 during the first month and a half of the program, mainly concentrated in Chicago and Rockford. With over 170 additional stores participating in the promotion, advertising efforts now needed to cover the entire state. The State of Illinois approved a substantial media buy at the end of June, providing a much-needed increase in advertising efforts during the final stages of the program. All promotional newspaper advertisements are listed below. Date Newspaper Section Paid Circulation May 5, 2004 Chicago Tribune Food Section 674,237 May 5, 2004 Rockford Register Food Section 70,000 May 12, 2004 Chicago Tribune Food Section 674,237 May 12, 2004 Rockford Register Food Section 70,000 Table 3 May Advertisements Date Newspaper Section Paid Circulation June 9, 2004 Chicago Tribune Food Section 674,237 June 16, 2004 Rockford Register Food Section 70,000 June 16, 2004 Springfield Register Food Section 67,000 June 16, 2004 Champaign News Gazette Food Section N/A June 16, 2004 Decatur Herald Review Food Section 35,000 June 16, 2004 Edwardsville Journal Weekly 13,000 June 16, 2004 Fairview Heights Journal Weekly 16,000 June 23, 2004 Rockford Register Food Section 70,000 June 23, 2004 Springfield Register Food Section 67,000 June 23, 2004 Champaign News Gazette Food Section N/A June 23, 2004 Decatur Herald Review Food Section 35,000 June 23, 2004 Edwardsville Journal Weekly 13,000 June 23, 2004 Fairview Heights Journal Weekly 16,000 Table 4 June Advertisements 9
10 Newspaper Paid Date Section Circulation July 4, 2004 Springfield Register Home 67,000 July 4, 2004 Champaign News Gazette Home 34,092 July 4, 2004 Decatur Herald Review Home 35,000 July 4, 2004 Fairview Heights Journal Home 16,000 July 7, 2004 Springfield Register Food 67,000 July 7, 2004 Champaign News Gazette Food 34,092 July 7, 2004 Decatur Herald Review Food 35,000 July 7, 2004 Fairview Heights Journal Food 16,000 July 7, 2004 Edwardsville Journal Food 13,000 July 9, 2004 Springfield Register Main News 67,000 July 9, 2004 Champaign News Gazette Main News 34,092 July 9, 2004 Decatur Herald Review Main News 35,000 July 11, 2004 Springfield Register Family 67,000 July 11, 2004 Champaign News Gazette Family 34,092 July 11, 2004 Decatur Herald Review Family 35,000 July 11, 2004 Fairview Heights Journal Family 16,000 July 12, 2004 Springfield Register Main News 67,000 July 12, 2004 Champaign News Gazette Main News 34,092 July 12, 2004 Decatur Herald Review Main News 35,000 July 14, 2004 Fairview Heights Journal Food 16,000 July 14, 2004 Edwardsville Journal Food 13,000 Table 5 July Advertisements Customer Service and Rebate Processing Honeywell operated the customer service and rebate processing operation for Illinois customers from its national rebate center in El Segundo, California. SMMPA processed all rebate applications for the promotion in Minnesota. The program was designed to operate with a reservation system. With this feature, Honeywell and MEEA would have better control over the distribution of rebates and rebate dollars. As stated on the program applications, customers were required to call the program s toll free number to reserve their rebate on a first come, first serve basis. MEEA s customer service representative issued the customer a reservation number, which the customer would then write on their application. Customers were given two weeks from the date of delivery to send their receipt, a copy of their utility bill and the completed application to the rebate center. In the first month of the program, call volume averaged between calls a week. After more advertising and expanding dealer participation, volume picked up and averaged calls a week. MEEA began receiving customer applications the first week, although the initial volume was low. By the first week of May, the rebate center was receiving its highest volume of applications, about 150 per week. 10
11 Twelve percent of the applications received were incomplete and required additional communication with the customer. MEEA first called the customers to notify them of the problem. If the customer did not respond, a letter detailing the missing information would be sent to the customer. Three to four phone calls and a letter were sometimes required to elicit a response. MEEA received 4,278 applications over the course of the program. By the end of the program, only 6 applications failed to be completed by the customers, of which all were missing sales receipts. There were 4,741 reservation numbers given out throughout the duration of the program. For various reasons, 463 applications were never received, a dropout rate of almost 10%. Customers that received reservation numbers but failed to send in their applications were sent a final letter in mid August. Most applications were received prior to the final rebate data submittal date of October 15th, Applications received after the deadline were paid in full by the State of Illinois. Table 6 outlines the program production by program period. Date Range Number of Reservati ons Applications Received Applications Completed for Payment Period 1 (April 15-30) Period 2 (May 3-14) Period 3 (May 17-28) Period 4 (May 31-June 11) Period 5 (June 14-25) Period 6 (June 28-July 9) Period 7 (July 12-July 23) 650 1, Period 8 (July 26-August 6) Period 9 (August 9-20) Period 10 (August 23-end) , Totals 4,741 4,278 4, Table 6 Program Production (IL only) Applications Cancelled Rebates by Electric Company As the largest service territory in the program, ComEd customers received the greatest volume of rebates. There were a total of 3,501 rebates in ComEd s territory with 771 rebates making up the other 41 electric companies. Illinois customers in the Ameren Energy territory received 290 rebates. 11
12 Store Production Numbers Charts 1 and 2 display washer sales by the top 5 producing chain stores and top 5 producing independent stores. A complete list of all participating stores and their production numbers is included in the back of the report. Top 5 Producing Chain Stores Sears Best Buy Maytag Home Appliance Centers Grant s Appliance Home Depot Number of Appliances Sold Chart 1 Washer Sales per Top 5 Producing Chain Stores (IL only) Top 5 Producing Independent Stores Lindow s Appliances Sam s Best Brand Lucy s Appliances American Electronics Appliances ABT Electronics Number of Appliances Sold Chart 2. Washer Sales per Top 5 Producing Independent Stores (IL only) 12
13 Rebates by Manufacturer There were 4,272 rebates generated over the course of the program in the state of Illinois. Maytag was the leading manufacturer, capturing over 58% of the market share. Chart 3 shows the breakdown of rebates by manufacturer, and their percent of the market share. Percent of Rebates by Manufacturer Bosch 8% (325 Rebates) LG Electronics 8% (346 Rebates) Fisher and Paykel 13% (544 Rebates) Frigidaire 7% (290 Rebates) GE 6% (254 Rebates) Other* 0.2% Miele, 6 Rebates Asko, 3 Rebates Equator, 1 Rebate Maytag 58% (2,503 Rebates) Chart 3 Rebates per Manufacturer (IL only) Rebates by City There were 520 cities in Illinois that participated in the promotion. As expected, Chicago produced the largest number of rebates. Chart 4 shows the top five cities in which customers participated. 13
14 Rebates - Top Five Cities Plainfield Aurora Rockford Naperville Chicago Chart 4 Number of Rebates by Top Five Cities (IL only) Energy Savings According to the Consortium for Energy Efficiency (CEE) Residential Clothes Washer Initiative Program Description (1996, revised 2002), clothes washers that meet the specifications set by the CEE are estimated to save up to 776 kwh per year when used with an electric water heating system and up to 26 therms when used with a gas water heating system. Potential water savings are estimated at 9,000 gallons annually. The CEE also estimates that in the USA, 55% of water heaters are gas and 45% are electric. Using the above statistics, the estimated annual savings for electric, gas and water are shown in Table 7. Annual Savings for IL Washer Rebates # of Washers Energy/Water Savings $ Savings Electric 1,922 1,491,472 kwh $126,775 Gas 2,350 61,100 therms $26,273 Water 4,272 38,448,000 gallons $109,192 Total 4,272 $262,240 Table 7 Estimated 2004 Annual Regional ENERGY STAR Clothes Washer Rewards Rebate Program Savings (IL only) Estimates are based on average national rates: $0.085/kWh, $0.43 per Therm, gallons of water (DOE, 2000). Assume 12 year life for lifetime savings. 14
15 Annual Savings for SMMPA Rebates # of Washers Energy/Water Savings $ Savings Electric ,918 kwh $8,578 Gas ,132 therms $1,777 Water 289 2,601,000 gallons $7,386 Total 289 $17,741 Table 8 Estimated 2004 Annual Regional ENERGY STAR Clothes Washer Rewards Rebate Program Savings (IL only) Estimates are based on average national rates: $0.085/kWh, $0.43 per Therm, gallons of water (DOE, 2000). Assume 12 year life for lifetime savings. Rebate Funding A total of $392,700 was distributed to customers in Illinois. While the reservation system was helpful in controlling program over-spending, there were check processing delays. In the beginning of the program, the wait period for check distribution was about 4-6 weeks. By the end of the program, the turn around time was reduced to 2-3 weeks. The funding process for the rebate bank account required money be transferred between multiple organizations, however, for the most part, the process went smoothly. 15
16 Financial Analysis The Benefit-Cost Ratio for the 2004 Washer program conducted in Illinois is 3.03 with an estimated payback period of 3.22 years. A more detailed breakdown of the basic financial analysis of the program follows: 16
17 Lessons Learned Overall, the program was a success. The program was well received by retailers and customers. Program performance was exceptional. Despite the 50% reduction in market access due to the non participation of both Whirlpool and Kenmore and the relatively slow sales rate early in the program, the overall operational structure for this program proved highly effective. The most challenging aspect of program development for the national collaborative (of which MEEA was a core and active participant) was designing a rebate incentive structure that met the needs of all of the national appliance collaborative members. Members wishing to promote both energy and water efficiency wished to differentiate rebate amounts based on a washer s Modified Energy Factor while other members were simply interested in promoting ENERGY STAR qualified units. Thus participating manufacturers had to adhere to two different incentive structures as determined by each regional collaborative member. As a direct result of this difference in emphasis regarding energy efficient clothes washers there will not be a national appliance collaborative seeking manufacturer participation. Rather, each region will most likely forge specific relationships with manufacturers to offer consumer incentives/education on ENERGY STAR qualified models. In 2005 MEEA will work with other regional program administrators to develop consumer incentive programs with all of the major manufacturers offering product in the Midwest. Table 8 outlines some detailed issues encountered during the campaign as well as potential solutions. Issue Some major manufacturers declined participation Early on, some of the manufacturer representatives felt too many territories were being excluded. There was no program ending date listed on the application. Instead, the application stated All applications must be postmarked no later than 2 weeks from delivery date. There were over 20 new construction applications where customer delivery was not set until after the program was to expire. Instructions for the customer should be stated somewhere on the application. Potential Solution Offer additional mechanisms for participation. Pursue other options to the mail-in rebate. Open the program to the entire state in the beginning of the program and risk running out of rebates before the program expiration date. List a program closing date on the application. Address the New Construction applications early on in the program. 17
18 Energy Star Optional Questions - Results: I have the following appliance(s) in my home: Appliance: Appliance Fuel Type: Water Heater 3,262 Electric Clothes Dryer Electric This clothes washer will be used in a building / house type (check all that apply): Single Family 3,144 Rent 49 Own 1,883 Multi-Family 47 Primary Residence 1,425 4 or more unit Bldg 38 Condo/Townhouse 325 Business 13 Farm 57 Vacation Home 6 What was the main reason you purchased an Energy Star qualified Clothes Washer? Energy Savings 1,264 Less Detergent required 5 Water Savings 194 Rebate 97 Cleaner Clothes 63 Quieter operation 36 Gentler on clothes 109 Takes up less space 36 Larger Capacity 199 Like to buy the best 269 Other 119 Did you know about this offer before you purchased your ENERGY STAR qualified clothes washer? Yes: 1,929 No: 345 If so, did this offer influence your purchase decision? Yes: 1,292 No: 572 Do you own any other ENERGY STAR qualified appliances? Yes: 1,434 No: 101 If so, please check all appliances that apply: Refrigerator 635 Dishwasher 441 Room air conditioner 80 Dehumidifier 76 Home/office electronics 202 Why did you purchase a clothes washer at this time? Old machine broke 1,358 Energy Savings 228 New home 627 Water Savings 157 Remodeling 105 Performance 193 Wanted upgrade 474 Do you know anyone else with an ENERGY STAR qualified clothes washer in his or her home? Yes: 869 No: 754 How did you hear about ENERGY STAR qualified clothes Washers (please check all that apply)? Retailer / Salesperson 2,139 News report 75 Newspaper Ad 755 TV ad 64 Friend / relative / co-worker 256 Insert in utility bill 51 Other 141 Magazine Ad 47 Web Site 97 18
19 Customer Comments The application included a field for customer comments. Below is a sampling of customer comments on the program: Thank you for the offer! Always looking for ways to save on our high utility bills. It s good you re encouraging purchases of energy efficient appliances. I always prefer (to purchase) Energy Star if possible. This rebate makes the ecologically sound choice more economically sound. What a wonderful incentive am looking forward to lower water & electric bills! I changed to this model because of the rebate. Great program! Thanks for helping Mother Earth! Great idea to reward consumers for being more energy & water conscious. Your reward offer made it possible to purchase this unit. Thank you! 19
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