HomeMy WebLinkAboutA038 - Resolution approving updates to Smart Energy Rebate ProgramITEM #:38
DATE:11-18-25
DEPT:ELEC
SUBJECT:UPDATES TO SMART ENERGY REBATE PROGRAM
COUNCIL ACTION FORM
BACKGROUND:
Electric Demand Response programs have limited lifetimes and should be reviewed and
adjusted as the available technology and markets for energy-efficient technology change. Staff
reviewed the utility's current demand response programs, benchmarked with other local
electric utilities, and drafted recommended changes for review by EUORAB at their October
2025 meeting.
After reviewing these proposed changes, EUORAB is recommending the following
changes to the Demand Response program:
Retire the Custom Rebate Program - Staff proposes retiring the custom rebate
program effective January 1, 2026, because the program has largely been used for LED
upgrades. The LED Lighting rebate program was retired in 2020 due to the technology
becoming widely available. Custom rebates often rely heavily on an independent
analysis of energy savings conducted by a third-party engineering firm to validate
savings that offset the payback to the utility.
Increase the minimum efficiency for Air Conditioner rebate to 17.2 Seasonal
Energy Efficiency Ratio (SEER2) - Currently, air conditioners of 15.2+ SEER2 are
eligible under the rebate program. Staff proposes to increase the minimum SEER2
rating to 17.2, as a SEER2 rating between 15.2 – 17.1 is no longer considered
above standard efficiency. The incentive for these units will be capped at $200. Other
utilities, including Midland and federal tax incentive programs, have recently increased
their minimum SEER2 ratings to 17 as well.
Remove rebates for freezers, small refrigerators, dehumidifiers, and dishwashers -
Energy Star-rated appliances have become widely adopted by manufacturers. Electric
staff believes that the decision to purchase these products is no longer dependent
on the rebate offered from the department. Surrounding utilities have retired similar
appliance rebate programs, and staff believes that following suit will allow the Smart
Energy rebate program to put more resources where needed.
Increase Heat Pump and Heat Pump Water Heater Rebate Program to support the
City's Climate Action Plan - Staff proposes increasing the air source heat pump,
geothermal heat pump, and heat pump water heater rebates to increase adoption. This
also better align Ames' programs with neighboring utilities. The changes will keep the
existing rebate structure. For air source heat pumps, units between 15.2 - 17.1 SEER2
will qualify for a $600 rebate. Air source heat pump units with SEER2 values greater
than 17.2 will qualify for a $1,200 rebate. A different measure is used for geothermal
heat pumps. Installed units that are Energy Star rated will be eligible for $1,000/ton.
Units that are not Energy Star rated are eligible for $800/ton. These technologies are
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alternative heating and cooling systems to natural gas by transferring heat rather than
generating it. This increases their efficiency and reduces the home's carbon
footprint. Increasing the rebate tied to these products achieves both Smart Energy
and Climate Action Plan goals.
Create a Rebate for Attic Insulation to Help Customers Reduce Energy
Consumption - Attic insulation is one of the most cost-effective ways to increase energy
efficiency in your home. The EPA estimates that homeowners in our region can save an
average of 16% on heating and cooling costs annually by properly air sealing their
homes. As many older homes undergo retrofits, addressing insulation is critical to
strengthening the home's building envelope and ensuring long-term savings. Staff
believes this incentive will encourage weatherization improvements that will lower
energy consumption for City of Ames Electric customers. Table 1: Costs of
equipment and rebate amounts.
Rebate Current
Amount
Proposed
Amount
Estimated
Equipment
Costs
Neighboring Utilities'
Rebate
Geothermal
Heat Pump
$400/$500 per
ton
$800/$1,000
per ton
$15,000 -
$20,000 $800-1,500 per ton
Air Source
Heat Pump $500/$1000 $600/$1200 $8,000 $600-$1,500
Air Source
Heat Pump
Water Heater
$400 $500 $2,500-$3,000 $500-$600
Central Air
Conditioner $200/$400 $0/$200 $3,000 - $5,000 $0 - $400
Attic
Insulation N/A
50% of the
project cost up
to $250
$2,000 - $3,000 $500
ALTERNATIVES:
1. Approve the changes to Smart Energy Rebate Program as proposed above by the staff
and recommended by EUORAB.
2. Approve selected changes to the Smart Energy Rebate Program.
3. Do not approve changes to the Smart Energy Rebate Program and refer it back to
EUORAB for additional study.
CITY MANAGER'S RECOMMENDED ACTION:
Reviewing rebate offerings is a best practice for utilities. As such, staff and EUORAB
have re-evaluated its rebate offerings and are proposing changes that better incentivize
climate action strategies. Therefore, it is the recommendation of the City Manager that the
City Council approve Alternative No. 1.
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